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FINANCIAL, 

ECONOMIC, AND MISCELLANEOUS 

SPEECHES AND ESSAYS 





c/^7 



FINANCIAL, 

ECONOMIC, AND MISCELLANEOUS 

SPEECHES 



AND ESSAYS 



BY 



HENRY CLEWS, LL.D. 

AUTHOR OP " FIFTY YEARS IN WALL STREET " AND 
"THE WALL STREET POINT OF VIEW" 



NEW YORK 

IRVING PUBLISHING COMPANY 

1910 






Copyright 1910 

BY 
HENRY CLEWS 



€CI.A278426 



PREFACE 

Several of these Addresses, originally printed in pamphlet 
form, are now out of print; notably the addresses on Socialism 
(p. 271) and American Citizenship (p. 429), of which several 
editions were required to meet the demand. As letters con- 
stantly reach me requesting copies of these and other speeches 
I have made, and which I can no longer supply, I have been 
urged by many friends to collect and publish in one volume 
all my public utterances of recent years (1905-1910), and to 
these I have added a selection from the articles which I con- 
tributed to different periodicals, about that period. 

In my public appearances before audiences (which embraced 
church congregations, university, college and high school stu- 
dents, bank and trust company officials and their employees, 
members of economic and municipal reform clubs, manufac- 
turers, commercial travelers, and others), I have continually 
preached high ideals of citizenship, more honesty in public and 
private affairs, and all that makes for righteous living, for, 
without the possession of these qualities our greatness as a 
nation availeth nothing. 

I have warmly defended Wall Street in the following pages 
because it is a barometer of values, a necessary market for 
incomes, an index to industrial conditions, and whose beneficial 
influence is co-extensive with the world itself; but, on the other 
hand, I have also pointed out defects in our financial system, 
where such exist, and have suggested proper remedies for their 
correction. 

Henry Clews. 
v 



CONTENTS 

PAGE 

Preface v 

Business Education and Commercial and Banking 
Methods 1 

Publicity and Reform 15 

The Monetary Situation and Its Remedies .... 29 

Individual and Corporate Wealth 43 

No Danger in Great Fortunes and Great Corpora- 
tions in America 58 

The Situation in Wall Street and the Nation . . 69 

The Financial and Trade Situation and Prospects . 99 

The National Corporation Problem 117 

Currency Legislation — The Money Power and the 
Business Outlook 132 

A Review of Financial and Trade Conditions . . . 147 

Banks and Their Relation to Commerce and Prosper- 
ity Revival 169 

No Government Guarantee of Bank Deposits, and No 
Ownership of Railroads by the Government . . .175 

Investment and Speculation 191 

The American Mercantile Marine, Its Condition, Im- 
provement and Safety, and the Duty of Congress 
as to Foreign-Built Ships, and the Tariff . . .211 
vii 



viii CONTENTS 

PAGE 

Democracy and Evolution 225 

Theodore Roosevelt; a Great American 232 

America Greets Japan 249 

Shall the Suffrage be Given to Women? .... 255 

Individualism versus Socialism 271 

National Ideals 291 

Reasons Against a Central National Bank and Postal 
Savings Banks 299 

Woman in Politics, Nature, History, Business and the 
Home 315 

A Luncheon to the President 330 

Peace and Arbitration 332 

A Welcome to Heroes 336 

The World's Fair in 1913 339 

King Edward the Seventh 345 

Memorial Day Address 352 

Prince and Princess Fushimi 356 

The Monroe Doctrine, and the Intervention of the 
United States in Behalf of Mexico ...... 358 

England's Neutrality in Our Civil War .... 36l 

Our Railroad. Methods 365 

Japan versus Russia — a Personal View of a Wonder- 
ful Oriental Development 381 

Our Age of Gold 391 

The Wage Earner and Capital 399 

Railroad and Industrial Capitalization 407 



CONTENTS ix 

PAGE 

The Advantages of an Export Trade 415 

Harriman 417 

Introductory Remarks 427 

American Citizenship 429 

Negro Education 444 

Index 449 



FINANCIAL, ECONOMIC AND MISCEL- 
LANEOUS SPEECHES AND ESSAYS 

BUSINESS EDUCATION AND COMMERCIAL 
AND BANKING METHODS 

Address delivered to the Minnesota Bankers' Association at Min- 
neapolis, on June 21, 1905. 

I NEED hardly say that the bankers of this country are 
deeply interested in the choice of methods for directing 
and developing our productive energies, and in the devel- 
opment of the mechanism by which our business is controlled. 
On the other hand, the brokers of the community who deal in 
stocks, bonds, commodities and other property are earnestly in- 
terested in having monetary values kept sound. They are pri- 
marily desirous to see investors protected from the irregularities 
and fluctuations produced by the misuse of credit or misrepresen- 
tation. 

It is often supposed by thoughtless persons that some natural 
opposition exists between bankers and the investing public. 
Some go further and assume the existence of such an opposition 
between the consuming class and the bankers of the country. 
No errors have been more mischievous in our economic and 
political life than these. What hurts the financial interests of 
the country injures its great public. The greatest error of all 
is the belief in an opposition of interest between " Wall Street " 
and the bankers of the nation. Their interests are identical and 
commercial soundness is equally the foundation of both. 

The problem from this common standpoint is the method to 
be employed in the proper extension of credit and the develop- 
1 



2 BUSINESS EDUCATION 

ment of appropriate machinery for its use. Commercial condi- 
tions in the United States are anomalous in many ways. We 
have produced a marvellous industrial and technical equipment 
for the production of raw material and the manufacture of 
goods. We have developed a system of transportation which 
has no equal, and elaborate and efficient machinery for ex- 
changing commodities and values has been built up. Practi- 
cally the whole of our industrial and economic mechanism has 
been reconstructed within the past few years. 

In this great process of development and growth, it is not 
strange that some departments of business have lagged behind 
others, and of these unsatisfactory elements the most conspicu- 
ous is that of organization and management. Our business men 
have considered that a properly minute and careful attention to 
the details of administration and operation was sufficient. They 
have too often neglected to follow and profit by the obvious 
changes in organization, which, if adopted, would save them 
much personal effort and — more important still — keep them 
from actual ignorance of the condition in some respects of their 
own enterprises. But, of many improvements that might well 
be introduced into our commercial practice, the one of primary 
significance is the adoption of intelligent methods of accounting 
and auditing by all corporations or associations of persons 
which employ a considerable capital. The time has certainly 
arrived when the old and familiar systems of " bookkeeping " 
will no longer fittingly and advantageously answer for the con- 
duct of modern financial business. It is now impossible for the 
manager of any large business to oversee in person its various 
operations and details. Results must be reduced to a scientific 
basis; they must be classified with the same minute care that 
a scientist would devote to the arrangement of a series of plants 
belonging to a new family or genus. This need for reform and 
for scientific method is not confined to any one group of institu- 
tions or any particular species of business enterprise. It is a 
general, if not universal, need, resulting from the great growth 
of our activities, both in their scope and in the amount of capi- 
tal they involve. Nor is it confined to private enterprise. It 



BUSINESS EDUCATION S 

extends also to municipal governments which, influenced in 
part by the work on accounting which is being done by the 
census office, are casting about for ways by which they may 
reorganize their business and statistical methods. 

It will not, however, be sufficient for our business men merely 
to revise their methods along the lines indicated. There must 
be added a system of publicity of accounts which shall convey 
to the investor, in a sincere and unmistakable way, every busi- 
ness detail that he has any right to know. 

I do not mean by this that the legitimate secrets of incor- 
porated companies should be thrown open to the searching eyes 
of business enemies, or competitors. In introducing a proper 
system of accounting and auditing there should be full recogni- 
tion of the distinction between what Mr. James B. Dill calls 
" private publicity," and " public publicity " — publicity for the 
investor, the man directly concerned in the business which em- 
ploys his funds, and publicity for the prospective investor, the 
legislator and the press. Our legislators would do well to over- 
come the defect in corporation law from which, in many States, 
injury still results — that of failing to recognize the distinction 
between companies which are public in their nature and methods, 
and those which are private. Nothing can be clearer than 
that a company which looks to the general investing com- 
munity for resources should give to that public statements so 
clear and precise that its financial standing and the character 
of its management can be properly estimated. On the other 
hand, the time must soon come when stockholders owning con- 
siderable portions of the capital of incorporated companies, 
whether public or private, will have the right to demand minute 
investigations and reports upon their operations and assets. 
Such reports can be intelligently made only where proper 
methods of accounting are employed, and where the inspection 
is made by a man of special training for the work. So far as 
relates to public companies and their accounts, it would be pre- 
ferable that the information should be voluntarily furnished to 
the public than that it should be exacted under forms of law, 
and perhaps under conditions that might be, not merely dis- 



4 BUSINESS EDUCATION 

tasteful, but positively injurious, to the concerns affected. 

There has, of late, been a remarkable growth in the intensity 
of prejudice and opposition displayed toward large corporate 
undertakings, or trusts. Much of this has been intelligent, 
while some has been malevolent and imbued with class prej- 
udice, and often ignorance has been the foundation of opinion. 
The growth of a habit of furnishing such accounts will have a 
two-fold effect. It will furnish a fund of information that will 
go far to dispel this ignorance and prejudice; and it will meet 
a growing public demand half-way. By conceding fully and 
frankly all that the public has any right to ask, the unfair 
criticism, which is now encouraging hostile forces, will be di- 
vested of its menace to private enterprise. 

It is often urged against such a policy that it would foster 
competition and invite hostile legislation or unreasonable taxa- 
tion. But these are precisely the results that it would be likely 
to avert. The drift of the times is wholly toward large com- 
binations, and nothing is so strong a deterrent to companies or 
persons proposing to enter a given field as the knowledge of the 
difficulties which any particular business has encountered, and 
the greatness of the volume of transactions required to produce 
satisfactory profits, as well as to insure the economy necessary 
in order to show any gains whatever. Such fair and open state- 
ments, too, will form the most reliable safeguard against munic- 
ipal ownership. All this, of course, presupposes, on the part of 
corporations, honest returns and a wide and public-spirited pol- 
icy upon which they can afford to go before the world. 

The successful carrying out of these ideas will imply the co- 
operation of skillful public accountants and auditors equipped 
with that thorough knowledge of economic principles which 
will enable them to formulate systems of classification, and 
show not merely the financial condition of a given business, at 
a stated time, but the commercial facts upon which its affairs 
rest and on which its future prospects of success must depend. 
Such a body of experts is already in existence, though the num- 
ber of competent men is, perhaps, small, and far from being 
well distributed throughout the country. The men available 



BANKING METHODS 5 

are, however, increasing in number and their profession is gain- 
ing in respect and consideration. We have a number of char- 
tered accountants of Scotland and England who have served 
the minimum apprenticeship of five years and have passed the 
rigid examinations in general accounting, commercial and bank- 
ruptcy law and actuarial science which are required before 
their diplomas of " C. A." are accorded to them. In at least 
four States, we have now distinct legal recognition of the 
accountant as a professional man, the standard being set by 
the State of New York in its Public Accountants Act, which 
grants the title C. P. A. to all such as pass a specified examina- 
tion. This example should be followed by other States. It 
would be well if these laws required the serving of a five years' 
apprenticeship before applicants could graduate. 

In banking we find no exception to the general backward- 
ness of method of which I have been speaking; and as our 
bankers are the leaders in commercial thought, other members 
of the business community can hardly be expected to be more 
progressive. Says ex-Secretary Gage: " It is a strange anom- 
aly that while in nearly every other department of life, improve- 
ment is the indispensable rule, in the field of banking, finance 
and exchange, we go on with an indifferent regard to the handi- 
cap imposed by defective methods." These words, though ut- 
tered some time ago, have been given unexpected and special 
significance by recent unfortunate happenings, on which I need 
not dwell, but which indicate the need of radical changes in 
bank examinations as well as in the relations of our banks with 
their customers and correspondents. 

It should be remembered that defective methods are more 
dangerous to the community in banking than in any other form 
of business. Individuals and corporations, needing to borrow 
money, present to the banks, when required, evidence of assets, 
and ask them to recognize the worth of these by granting credit 
thereon. If the banks accommodate their customers, they prac- 
tically guarantee the value of their assets, or the collaterals 
offered ; and, in case they err, their capital must pay the forfeit 
to the extent of their mistake of judgment. 



6 BANKING METHODS 

But unreasonable pessimism at a critical moment may lead 
to an undue contraction of credit, involving failures and panic, 
just as too confident optimism may produce unfounded inflation 
and excessive speculation. 

While there is this hazard of error in either direction, and 
the greatest good to the community can be realized only by 
correct judgment, the danger of accepting weak security is 
greater than that of rejecting sound foundations for extensions 
of credit. The Indianapolis Monetary Commission, writing in 
1897, from an analysis of the Comptroller's figures found that 
of 328 bank failures reported during a period of years 139 were 
connected with injudicious banking, or depreciation of securi- 
ties generally due to bad management. 

Though it is true that a lack of wise judgment in business 
can never be guarded against, it is evident that the percentage 
of error may be greatly reduced by proper methods of gaining 
information concerning the facts upon which judgment must be 
based. A defective system for obtaining such information 
must be held to be primarily responsible for the errors of judg- 
ment committed by bankers, who are as competent a body of 
business men as can be found in the world. The question of 
sound credit is thus exhibited as the problem of finding ways 
and means to reduce the granting of credit to a science. 

It is evident that in the performance of this most important 
function, the banker is entitled to all the aid tliat he can secure. 
And it must be added that there has been steady progress in the 
means adopted for assuring the character of this basis for 
credit. It was, perhaps, the most perfect system of granting 
credit when the local banker, like David Harum, knew every 
borrower in his own community and could make proper allow- 
ances for personal untrustworthiness, or give personal integrity 
and initiative their due weight as security for the payment of 
loans. 

Unfortunately, the direct personal touch is lost as commer- 
cial communities grow larger and commercial life becomes more 
complex. The old methods grow antiquated, like the stage 
coach and the wooden sailing vessel in the face of modern ideas 



BANKING METHODS 7 

of transportation. In order to take their place, an ingenious 
mechanism has been developed in our best institutions. The 
older and more familiar method of lending upon general knowl- 
edge of the strength of the names presented, and upon informa- 
tion as to the main circumstances of the business, gathered in 
some more or less casual way, has been discarded. In its place, 
there is now being generally substituted throughout the coun- 
try the practice of requiring borrowers to make full statements 
of their business before granting them any accommodation, and 
a complex and highly developed system of recording and classi- 
fying information concerning borrowers has been evolved. 

The man who would get credit must fill out forms which 
furnish in more or less detail, according to the circumstances, 
the data which will enable the bank to judge of his business. 
In the modern financial institution the " credit department " has 
become the regulator of the whole mechanism. Some consider 
the present requirements of full statements and appraisement 
unreasonable. There has probably never been a change or for- 
ward step in business practice that was not so considered by 
some of the persons affected by it. Yet no change in our bank- 
ing methods can be more conspicuously justified than this. It 
has long been in vogue in foreign countries where banking is 
more nearly a profession than a business. Says Professor Al- 
bert S. Bolles: "A borrower wishes a bank to put its funds 
for a time completely beyond its reach; surely he ought not to 
expect that this will be done, unless assured that the money 
will be forthcoming at the time promised. Ought the bank to 
be satisfied with his promise that he will do so? We all know 
what a wide and impassable gulf there often is between inten- 
tion and performance. The applicant may be perfectly honest 
and have the best intentions, but a true disclosure of his af- 
fairs might at once lead the bank to decline his application." 

The fact that many of our business men, even those who 
are leaders of thought in their own communities, continue to 
employ antiquated methods in the conduct of their business 
and still depend upon out-of-date forms of statement, entails 
grave danger to the credit basis of the community. And this 



8 BANKING METHODS 

danger is the greater because those who are the cause of it have 
no intention to deceive. Some, when they become involved, 
purposely resort to misleading methods of statement, or even 
wilfully misrepresent the state of their aifairs. But these are 
the exceptions. The truth is that this is more than a question 
of personal honesty and honor. It involves the commercial 
soundness of the community, and every effort should be em- 
ployed to ascertain facts, and make sure that the statements 
submitted by applicants for credit correctly represent the state 
of the business to which they relate. Our practice has, in this 
regard, been far too lax; and a long step toward sounder condi- 
tions would be taken were our bank managers to require the 
certification of the balance sheets of borrowers by competent 
public accountants. Such a plan is followed in European coun- 
tries with most satisfactory results. 

The banking community can do much toward the introduc- 
tion of sounder methods of accounting and better business 
practice. The requirements that the banker makes, the princi- 
ples that he lays down, will be accepted by those who look to 
him for light and leading. But there is another factor in the 
movement that must be considered of controlling importance. 
This is the proper education of those who are to become our 
business men. I do not in the least deprecate the services and 
splendid initiative of those who, by their own unaided abilities, 
have brought this country to its present commanding stage of 
development. They have laid the foundations of our commer- 
cial prosperity deep and strong. I do them no injustice when 
I say that, in the new career of world commerce upon which we, 
as a nation, have entered, there is pressing need for a new 
kind of technical instruction in commercial subjects which shall 
at least equal, and if possible surpass, that which is afforded 
to young men in Europe who are contemplating a commercial 
career. The recent marvellous advance made by Germany in 
gaining control of the markets of the world is largely due to the 
minute and careful technical instruction afforded to her people 
by a thorough system of technical, trade and commercial 
schools. And what Germans have done by their technical and 



BUSINESS EDUCATION 9 

industrial training they are beginning to do through their com- 
mercial education. Inquiries made by the London Chamber of 
Commerce not long ago showed that at least 35 per cent of the 
firms interrogated there employed foreigners, principally Ger- 
mans. Many gave it as their opinion that foreign training was 
such as to fit its recipients so fully for modern commerce as to 
preclude the possibility of successful competition by others. 

The question of introducing such a system of instruction in 
this country has been much discussed. It has been asked 
whether it can properly be furnished by our higher institutions, 
and some have doubts whether it can be given at all. That 
existing methods in education are unsatisfactory and that a 
new kind of training should be substituted for them is beyond 
question. 

Granting that the new education for business men can and 
must be given in place of, or at least in addition to, existing 
curricula the question still remains : By what group of institu- 
tions should such training be furnished? Perhaps this question 
can best be answered by briefly stating what is actually being 
done. The past few years have witnessed a remarkable in- 
crease in the number and scope of courses in economics, finance 
and kindred subjects that are being afforded by our colleges, 
and there are now few colleges of importance in which such 
instruction is not afforded, and fewer still where it is not 
recognized as indispensable. Too often the instruction afforded 
by our higher institutions has been abstract, hair-splitting, de- 
void of relation to actual life. It has been metaphysical rather 
than practical. But this trouble is now at last being appre- 
hended, and the remedy is beginning to be applied. In six or 
eight American universities, earnest efforts are being made to of- 
fer courses that shall be truly representative of practical busi- 
ness. At the " School of Commerce, Accounts and Finance," of 
the New York University, at Dartmouth College, at the Wharton 
" School of Finance " in the University of Pennsylvania, and at 
the Universities of Chicago, of California, of Wisconsin, and 
elsewhere, this effort is being prosecuted with zeal and with 
hopeful chances for success. 



10 BUSINESS EDUCATION 

Practical courses in banking, accounting, transportation, cor- 
poration finance, international exchange, industrial processes, 
and kindred lines of study, are being developed, and a new 
literature, practical rather than theoretical, is appearing. The 
process will be a long one, but a sound foundation is being laid. 
How real a start the new movement is getting can be realized 
from the fact that, during the past eighteen months, at least 
five American University Presidents have attempted to bring 
together men who had pursued a business specialty, and who 
were capable of giving instruction in it. 

The accountants' profession, in view of its great and grow- 
ing importance, ought indeed to be definitely and formally 
raised to a higher level. Every university, and every college, 
should have an Accountants' School, just as it has a Medical 
School, or a Law Department, and give diplomas to accountants 
on graduating, as it would to graduating students in either of 
the other departments. A separate degree for accountants 
would, of course, have to be created, and this degree would not 
only definitely and formally elevate their business to the rank 
of a profession, but command public confidence in their work, 
so that their certificates of the results of examinations of ac- 
counts would be accepted as reliable and conclusive by the 
public. 

While something has been done, and much is now doing, far 
more still remains to be done, for ultra-conservative men still 
cling to the older type of education. The task of popularizing 
the work, of carrying the new ideas of training over the length 
and breadth of the land, will be a labor of many years. Its 
complete and ultimate success must depend upon the bankers 
and business men of the country. What they demand and 
what they support, that we shall have, in time, and not until 
our technical and commercial education is raised to a par with 
that of other countries, shall we reach a sound and safe and 
equal basis of competition with them in that respect. In pro- 
portion as well trained men take their places everywhere in the 
industrial life of the nation, will new and exact methods be 



BANKING METHODS 11 

everywhere introduced and improved upon, and the foundations 
of our commerce and credit be strengthened. 

But, without reference to the broader effects of the new 
commercial education, more careful scientific accounting and 
auditing will not only reduce bank failures to a minimum, but 
lessen the danger of loss to banking institutions from erroneous 
valuations of the security offered for loans and unwise dis- 
counts. If these points be conceded, there are several im- 
portant inferences that may safely be drawn from them. Prob- 
ably the most important of these inferences relates to the basis 
upon which our bank note currency now rests. Given a con- 
tinuance of present conditions, the rapid reduction of United 
States bonds is a foregone conclusion. Already their price 
renders note-issues based upon their deposit with the Treasury 
of little or no profit to the bank which puts them into circula- 
tion. The objection to existing conditions is greater in the 
limitations placed upon the reduction of circulation which seem 
designed for the very purpose of preventing the attainment of 
elasticity in our bank currency. The national banks are in im- 
perative need of a removal of the unreasonable limitation upon 
withdrawals of bonds and of the introduction of such other 
minor changes as will tend to render the national banking 
system more responsive to business needs. 

The proposal to do away with the United States bond-security 
behind our national bank note-issues and to place them upon 
the same basis as the Canadian bank bills, has often been 
mooted. Two classes of reasons are commonly assigned for our 
failure to accept the experience of other nations in regard to 
the conditions of issue of bank notes. One class relates to the 
difficulty of properly supervising the banks themselves, and 
assuring their honest administration of the funds committed to 
their charge; the other to the difficulty experienced by bank 
officers in properly judging the worth of the assets upon which 
the new note-currency would rest. All these considerations are 
evidently reducible to the single one of security. In other 
words, let proper security be assured and there is nothing to be 



12 BANKING METHODS 

urged against the abandonment, at least in part, of the United 
States bond deposits as a basis for circulation and the introduc- 
tion of a more elastic currency system. 

The banker who doubts the possibility of issuing a safe 
currency based on commercial assets never questions the worth 
of his own assets and of those possessed by institutions con- 
ducted upon similar lines. He complains of the danger of bad 
loans, of fraud, of unsound banking, on the part of other insti- 
tutions. It is obvious that all banking within its own sphere, 
whether local, national, or international, should be as good as 
the best. If examinations are inadequate, we should see that 
they are made more rigorous; if doubt exists as to the value 
of a borrower's assets, or of the security offered, we should clear 
it up by demanding statements as to the condition of the bor- 
rower, or the value of his collaterals, made upon scientific lines 
and guaranteed by expert inspection and certification, or refuse 
accommodation. This is the plan now rapidly coming into 
vogue among large New York institutions, and there is no rea- 
son why it should not be adopted throughout the country. 

I do not know of any better evidence as to what can be done 
by the application of expert methods in ensuring the sound- 
ness of assets than that offered by the Hon. James H. Eckels in 
a recent address before the University of Chicago School of 
Commerce. He said: 

" Since I have been at the Commercial National Bank we 
have bought, in four years, some $70,000,000 of commercial 
paper, and of that we had only one note not paid at maturity, 
although it was paid later; and one of $10,000 on which there 
was a loss of $2,000." 

The benefits to be derived from an elastic currency have 
been so often and so well set forth that they need no recapitula- 
tion from me. Why, therefore, should we quietly put up with 
existing evils? Other countries are enjoying the fruits of 
proper currency methods in the shape of low interest rates, 
sound credit systems and assured knowledge of business condi- 
tions. Yet we still lock up in unavailable bonds large portions 
of our banking assets, which, so far as active business is con- 



BANKING METHODS 13 

cerned, might as well be underground. With improved busi- 
ness practice, with proper precaution for judging collateral 
security, and credits, and above all with a community of young 
business men trained in the best methods of the new education, 
we may look forward to a conservative forward movement to- 
wards sounder credit, more solid banking, and more responsive 
currency. 

Meanwhile, with regard to our national banking system, I 
suggest one very important preliminary change that Congress 
should authorize without delay, and that is to allow the na- 
tional banks to deposit, with the United States Treasury, State 
and Municipal bonds approved by the Comptroller of the Cur- 
rency, as well as bank assets, to secure one-half the currency 
they may issue. This would induce them to take out more 
notes than they find it profitable to do under the present law, 
which requires all their circulation to be secured by United 
States bonds. 

These, however, are so high in price, that they yield an ex- 
tremely low rate of interest, and there is little inducement to 
buy them even by the small country banks, which bank largely 
on their circulation, whereas the large city banks bank on their 
deposits. Secretary Shaw has already taken a step in this di- 
rection by accepting State and Municipal securities to secure 
Government deposits when we have had a stringent money 
market, and Congress will, I think, be willing to so amend the 
National Currency Act as to permit of the suggested change. 
The effect of this half-way measure would be great and im- 
mediate; and we urgently need this widening of the foundation 
for national bank note issues, in view both of the high price 
and the extreme scarcity in the open market of United States 
bonds, and the constantly growing requirements of our rapidly- 
growing population for currency. 

In particular, bank assets should be made available in the 
same way as United States or other bonds for circulation, the 
one form of security being practically equal to the other when 
both are good, and of course they would not receive the ap- 
proval of the Comptroller of the Currency unless they were. 



14 BANKING METHODS 

Bank officers all over the country should use their influence 
with Congress to bring about this desirable result. 

In our rapidly progressive age, whatever is obsolete or un- 
necessary, or a hindrance to development, should be swept 
away like cobwebs, and whatever is most direct, time-saving 
and conducive to our national prosperity and legitimate expan- 
sion, within the limits of safety and sound banking, should be 
adopted. 

Old-fogyism should not be allowed to stand in the way of 
needed reforms or obstruct the march of progress, either in 
banking or general business, and the financial and commercial 
policy of the nation should aim to leave banking, domestic 
trade and manufactures and foreign commerce, as much as 
possible, untrammeled by needless restraints. 

Among minor matters the present cumbersome and expen- 
sive custom of settling foreign exchange balances by shipping 
gold from this country to others, and vice versa, should be 
superseded by an international gold clearing house. The de- 
tails of this could be easily arranged by means of a gold note 
currency issued against gold deposits, and a mutual agreement 
between the large banks here and those in Europe. It has 
such obvious advantages that the sooner this international 
clearing-house method is adopted the better. It will save not 
only the freight and packing and insurance charges, and loss 
of interest on gold in transit, but the heavy loss by abrasion 
consequent on transportation. It will save time, risk and un- 
certainty, too, by making cable telegrams take the place of 
gold shipments in the transmission of credits, and by taking 
the initiative in this and the other matters suggested, we shall 
be foremost in the march of improvement. 



PUBLICITY AND REFORM 

Address delivered before the Wharton School of Finance, Uni- 
versity of Pennsylvania, Philadelphia, April 25, 1906. 

WE live in a progressive age, and we are at present 
passing through a period of salutary business re- 
form. This reform means improvement, and busi- 
ness men of all kinds should help and not retard it. The bank- 
ing, railway and insurance communities should, in particular, 
do all they can to promote it and invite the fullest publicity 
as to their transactions and methods of doing business. In 
this connection the opposition developed in the New York Leg- 
islature to the investigation of the banks was a mistake of 
judgment, because it was calculated to excite distrust, whereas 
willingness to submit to thorough investigation would allay it. 
This opposition drew more public attention to the agitation 
for a general bank department examination than would other- 
wise have been attracted to it, and the unwillingness to submit 
to it suggested that there was a screw loose, or something to 
conceal in connection with some of the State banks ; and that 
they were therefore vulnerable to attack, or, at least, open to 
criticism. This suspicion those concerned should have avoided 
by not only boldly facing the legislative music, but inviting 
it and leaving everything open and above board. Corporations 
and banking and mercantile firms that become at all objects 
of suspicion should, in their own interests, speedily clear 
themselves by inviting the fullest examination and publicity. 
Unsoundness and irregularity, if such existed, would thus be 
exposed and weeded out, instead of being nursed in secret, and 
so doing harm and impairing confidence in corporations and 
firms perfectly sound and regular in their methods and prac- 
tices. The sound concerns would stand better than ever after 
15 



16 PUBLICITY AND REFORM 

passing through this ordeal of publicity. The New York Leg- 
islature, as well as the Legislatures of the other States, should 
respond to the popular agitation for publicity by passing laws 
requiring all corporations, including banks and trust companies, 
to make at least semi-annual reports of their condition, certified 
to by registered public accountants, with power invested in the 
State Superintendents to order special examinations by such 
accountants, at any time, when deemed necessary ; that is, when- 
ever they were suspected of being unsound or irregular in their 
business methods. This should be done for the protection of 
others as well as to clear them of suspicion and restore their 
credit, if found to be sound and straight. Only the insolvent 
and the crooked would have anything to fear from this whole- 
some publicity. 

In this way disaster might be averted and impaired confidence 
promptly restored. I lay stress upon the employment of skilled 
accountants because the certified results of their examinations 
would be accepted as conclusive of the actual conditions being 
as they stated or described. They would speak with authority. 
It should be made a felony for an accountant to make a false or 
misleading report, and he should ever after be disqualified 
from practising. 

To meet the growing demand for them, every college and 
university should have a department for the special training of 
accountants, who on graduating should receive a diploma or 
degree, as in the medical or legal profession. Already the 
position held by certified accountants is high, but it should be 
raised still more by the action of the universities and colleges. 
Some of these have established departments for accountants, 
where the students undergo thorough training by men who 
have had practical experience in the profession, but all insti- 
tutions of learning ought to have them and maintain them in 
a high state of efficiency in view of their importance to the 
business community. The opposition to publicity shown by 
the New York State banking interest, as represented in the 
Legislature, where it has choked off probing, has thereby, 
aroused fresh suspicions and much adverse criticism. It is. not 



PUBLICITY AND REFORM 17 

surprising that many are led to suspect that there is much 
concealed that ought to be revealed. 

The strong desire for secrecy in the management of cor- 
porations, especially with life insurance companies, is obviously 
in defiance of public sentiment, and the Legislature should now 
make the house-cleaning thorough while it is about it. If it 
does less it will fail in its duty. 

It is indeed very surprising, under the circumstances, that 
the officers and trustees of the great life insurance companies 
should have supposed that anything short of complete cleansing 
and purification would satisfy their policyholders and the pub- 
lic. 

The bankers of the country are, more or less, intimately con- 
cerned in seeing this Augean insurance stable thoroughly 
cleaned out, for, unless it is, distrust will linger, and the life 
insurance taint will, more or less, continue to extend to the 
banks, bankers, bond dealers and trust companies, with which 
the life insurance companies necessarily have to do business. 

For the banking interests virtually to ignore the past, and 
say to the life insurance companies, " Go, and sin no more," 
would be pusillanimously evading the requirements of the sit- 
uation. The cloud that drifted over Wall Street from the 
insurance investigation must be entirely dispersed by the fullest 
investigation and publicity, and the establishment of a new 
regime in insurance management and its banking methods and 
affiliations. 

It is the duty of life insurance trustees to co-operate to this 
end, and for them to refuse to do so is to imply consciousness 
of their own inability to stand the searching ordeal. If such 
there be, owing to their purchases or sales of securities, in 
connection with their respective companies, or any other doings 
that cannot bear the light or are open to criticism, they should 
be ventilated and exposed without fear or favor. 

The efforts to smother further life insurance investigation, 
which had their counterpart in the opposition to the proposed 
banking department investigation, should be frowned down by 
public opinion, both in the interest of morality and good busi- 



18 PUBLICITY AND REFORM 

Hess practices. The bank and the banker should, like Caesar's 
wife, be above suspicion, and not less so the iife insurance man- 
ager and trustee. 

Turning to the railways, we find the need of stricter laws 
in matters that favor a few at the expense of the many, as, 
for instance, in the giving of rebates. To prevent these, not 
a mere fine, which can be easily paid, should be imposed, but 
the offense should be made a misdemeanor, punishable with im- 
prisonment. Railway officials would then, with the danger of 
an indictment and a term in prison before them, hesitate to 
violate the law. For their own reputation, as well as for the 
sake of their families, they would be likely to avoid that secret 
and unlawful rate-cutting, disguised by the payment of rebates, 
which has done so much in the past to foster unholy monopo- 
lies and crush competition, to the ruin of thousands. 

In the lime-light of publicity the irregular rebate practices 
of the railways, for the benefit of large and favored shippers, 
would be impossible; and equally so would have been the go- 
as-you-please and extravagant management of the life insurance 
companies as revealed by the insurance investigation. Under 
the new order of things, regulated by stricter laws, it should be 
made impossible for these irregularities ever to recur. The 
death-knell should also be sounded by these stricter laws and 
reforms of much of the " graft " that has been epidemic in 
political and business life. Publicity of accounts would be a 
protection to all solvent concerns and expose and eliminate 
the unsound and the fraudulent that would otherwise be a 
menace to them, and it should be welcomed by all who have 
nothing to fear from such publicity. 

We are passing through a reform — yea, a revolutionary 
period in business affairs. But good will come out of it, for 
with our improved business methods will come a higher sense 
of responsibility and a keener perception of duty, which cannot 
fail to inspire correspondingly greater confidence and produce 
more certain results. We shall thus have more conservatism 
in business and fewer speculative hazards and crookedness than 
before. 



DUMMY DIRECTORS 19 

Therefore, let the march of reform be unimpeded, for it will 
lead us to a higher financial and commercial eminence than even 
that on which we already stand, and hasten the time when 
this country will be the world's greatest financial and com- 
mercial centre. 

It would seem that many need more conservatism and pru- 
dence in their business ventures, and they would be the better 
for having the lime-light of publicity thrown on them. When 
the sky-rockets of the business world fall they are not the 
only sufferers, for they injure others who are perfectly sound 
and conservative by creating distrust of all. 

The accounting and publicity I advocate would expose, check 
and prevent the irregularities and the one-man power abuses 
that have ended in so many collapses. The one-man control 
of large corporations must come to an end. An ounce of pre- 
vention is better than a pound of cure. 

Corporations, too, should show that they have souls by not 
neglecting the welfare of their employees. They should pro- 
mote their health by giving them healthy surroundings where 
they work, and also by making graduated provision for old age 
service, or pensions in case of disability, after long service. 
This, or giving them a share in the profits of the business, would 
do much to narrow the gulf between Labor and Capital. 

The one-man power in large corporations, with a lot of 
dummy directors subservient to it, should also come to an end. 
Dummy directors are no better than so many decoy ducks that 
mislead the public. They are directors who do not direct, and 
are not expected to direct by those in control who selected them 
for election. They are consequently a false pretence. No 
man ought to accept a place as director or trustee of an insti- 
tution, or corporation, who does not fully appreciate the re- 
sponsibility of the position and the care and vigilance it 
demands and intend to faithfully and conscientiously perform 
its duties. To intentionally become a dummy director is repre- 
hensible, and directors in dealing with the officers of their cor- 
porations should have opinions of their own and not be afraid 
to express them. They are not alone responsible for their own 



20 PUBLICITY AND REFORM 

errors or wrongful acts, but for failure to expose and put a 
stop to the wrong-doing of the officers or employees under their 
control, and they should not assume such duties when they can- 
not properly attend to them. 

I once knew a man of very great business renown, who during 
the last thirty years of his life was much sought after because 
he possessed the qualifications necessary to make him a most 
satisfactory dummy or dumb director. Hence he was connected 
with a very large number of companies. He was a man of 
wealth, retired from business, and had great capacity, but it 
was of the avoirdupois kind. His chief qualification consisted 
in his always attending punctually all the meetings. He came 
early and stayed till the end. He watched closely to deter- 
mine which way the majority vote was going and always went 
with it. He was never known to open his mouth, except when 
the luncheon was served after the directors' meeting had ad- 
journed. He was much lamented by corporation managers 
when he died. He was their favorite director on the ground, 
as claimed, that he gave no trouble and was perfectly satisfied 
with the result of every meeting. When he was handed his 
five-dollar gold piece for attendance it caused him to go home 
rejoicing. I cite him as a specimen brick among dumb and 
dummy directors. 

Directors should make it their business to learn all that is 
going on in the corporations and institutions that they direct, 
so that they may qualify themselves to act intelligently, instead 
of in a blind-folded way, as is too commonly the case. They 
should assert their rights, and direct in fact as well as in name, 
but of course necessarily leaving all the details to the officers. 
They, too, should avoid grinding axes of their own at the ex- 
pense of their companies, and co-operate with both State and 
Federal officials in the strict observance and enforcement of the 
laws, and never connive or wink at their evasion. 

All these influences for the better would promote public 
confidence in our ways of doing business, and indirectly also 
contribute to the stability of our monetary position. What 
we greatly need is a more stable money market in Wall Street. 



A FREAK MONEY MARKET 21 

Such erratic changes in the rates for Stock Exchange loans that 
we sometimes see would create a convulsion in Europe, if they 
were possible there. But as they are not possible there, why 
should they be here? We are destined to ultimately become 
the monetary centre of the world, but that cannot be until we 
acquire the stability of the Old World in interest rates. 

A freak money market, jumping up to absurdly high rates 
and then down again, is as dangerous as it is intolerable. It 
is inimical to the proper transaction of legitimate business, and 
a disturbing factor that should be made as impossible in New 
York as it is in London, Paris or Berlin. What we need, among 
other things, to prevent it is more care and conservatism in 
banking circles. In the European money centres the rates for 
money rise and fall in response to supply and demand, just as 
they do here, but within narrow limits beyond which they 
never pass. There is no good reason why it should not be so 
with us. 

It is to be hoped that the eminently well qualified members 
of the committee appointed by the New York Chamber of Com- 
merce, — consisting of Messrs. Vanderlip, Conant, Straus, Cla- 
flin and Clarke, — will reach a solution of the problem of the 
money market and define how far its vagaries and irregularities 
are owing to a want of sufficient currency capital or credit, 
or sudden and excessive demands for loans, consequent on ex- 
cessive activity in speculation, or unwillingness to lend in times 
of distrust and panic. 

In European countries monetary stability can always be re- 
lied upon; and that element of stability, which our money 
market now lacks, must exist here before we can command the 
confidence of the world as the world's financial centre. But 
we are now rapidly taking steps in the right direction, and the 
reform movement in business and legislation can come none 
too soon for our national welfare. Let the good work of re- 
form go on and prosper, for from it we shall reap an abundant 
harvest in the future. 

There was no good and sufficiently sound reason why money, 
on call, should have loaned in Wall Street at rates ranging 



22 A FREAK MONEY MARKET 

from 100 to 125 per cent, per annum, — as it did in December 
1905, when in other cities all over the country it loaned no 
higher than six per cent. These money spasms, while local 
in their actual effect, exert a disturbing and demoralizing moral 
influence* which is far-reaching. Such pernicious activity in 
the money market is not natural. It is due to artificial" causes 
and ill-regulated methods affecting our local supply and de- 
mand. 

For the rates of interest to be leaping wildly up and down, 
in the loan crowd of the Stock Exchange, and changing vio- 
lently every few moments, according to the shifting bids and 
offers of the excited borrowers and lenders, would seem to be 
absurd and laughable enough for opera bouffe. But in the 
banking and Stock Exchange business it is a serious evil, in- 
volving large results. 

Such an abnormal money market is, of course, not very often 
seen, but it occurs often enough to make it important for us to 
study its causes and seek a remedy for such monetary excesses. 
It is indeed a topic so serious as to call for the gravest con- 
sideration. Yet neither the stringency nor these minute to min- 
ute, or hour to hour, fluctuations were caused by any fluctua- 
tion going on in the volume of the currency or any except local 
influences. 

What we have to guard against and prevent is these occa- 
sional spasms. Against the slow general rise and fall of in- 
terest rates for money of from, say, 2 to 6 per cent, per annum 
and vice versa, there is nothing to be said, for the movement 
is a legitimate one, a natural result of the varying supply and 
demand. We see it in the Old World, as well as the New 
World, but such rocket-like soarings, and such eccentric ups 
and downs as Wall Street has experienced from time to time, 
are peculiar to itself. It must, however, outgrow them, and 
the sooner it does so the better. It is not my purpose in this 
address to show how the end in view may be best accomplished, 
but that it can and will be accomplished within no long time 
is certain. The fault is not so much due to the want of elas- 



AN ELASTIC CURRENCY 23 

ticity in our currency system as to our local methods of doing 
business in stocks, and lending and borrowing money to carry 
them. 

The causes of general monetary stringency are always ap- 
parent, but the cause of the local scarcity of cash that sends the 
money rate up 5, 10, 20 or even 50 per cent, in an hour or so 
among a small group of borrowers and lenders in the Stock 
Exchange, could evidently be avoided, as it is in Europe, and 
it is the business and duty of both borrowers and lenders here 
to avoid it. 

One thing tending to produce occasional local stringency is 
that our money market has to contend with the evil effects of 
the New York Sub-Treasury, or rather the Sub-Treasury sys- 
tem, that locks money up that ought to be kept in circulation. 
Every Sub-Treasury acts practically as a Government bank, just 
as the old United States National Bank in Philadelphia did, 
and takes in all the money it can get, but pays out none, except 
on Government vouchers. So it does not perform all the func- 
tions of a bank, and we should have a more elastic currency 
if the Sub-Treasury system were abolished, which it doubtless 
will be in time. Theoretically, we have no United States Na- 
tional Bank, yet practically we have one in every Sub-Treasury. 
Until Congress amends the Sub-Treasury and National Cur- 
rency laws, the banks and trust companies could by a united 
understanding prevent extreme money rates, by agreeing not 
to charge in excess of 10 per cent, interest; or, what would be 
better still, 7 per cent., on call loans during periodical money 
strains. While they would lose some immediate profits, they 
would be abundantly compensated later on by making New York 
a greater, safer and stronger financial centre, which would ma- 
terially increase their business. 

In Germany emergency currency may be issued by the banks 
in times of stringency. This, in effect, releases them from 
the limit on reserves, just as, in panics, a Government order in 
council releases the Bank of England from the limit placed on 
its note issues, and allows it to issue its notes to an unlimited 



24 PUBLICITY AND REFORM 

extent. The consequent inflation of the currency under both 
the German and English systems, and the revival of confidence 
produced by it, brings relief in the money market. 

But our only way of obtaining similar relief is for the Sec- 
retary of the Treasury to order Treasury deposits to be made 
in National banks on the security of United States bonds, or 
if he is willing to accept them, first class State or city bonds. 
Assuming the banks to have the bonds, the Treasury may not 
always have the money to spare for this purpose beyond its 
proper working balance, and at the best it is but a make-shift 
expedient. 

That we need a more elastic currency is indisputable, and 
also such changes in our custom of borrowing and lending 
money on collaterals on the Stock Exchange as will secure sta- 
bility in rates of interest there, even in times of stringency. 
The time will come when the circulation of the National banks 
will be based on gold, instead of United States bonds, and in 
that way our monetary system will more closely approach that 
of the principal European nations. But we need not prepare 
to cross that bridge until we come to it. 

With regard to the other matters referred to, it is always 
well to strike while the iron is hot, and at present the reform 
movement in legislation affecting life insurance and banking 
concerns is at white heat, not only in the State of New York, 
but elsewhere, and it should be pressed forward until all the 
results aimed at are secured. 

In the first place, to accomplish this, the life insurance and 
bank investigations already in progress or proposed, should be 
carried out to the fullest extent, and, through the employment 
of expert and independent bookkeepers and accountants, made 
so thorough as to leave nothing hidden or in doubt. The re- 
sults in detail should then be promptly published, and in a 
form that all could understand, so that the public would know 
the plain, unvarnished truth. In this way rumors and sus- 
picions of underhand doings, bribery and corruption, graft, 
fraud, deficiencies in accounts, misappropriation of funds, and 
concealed insolvency, would, if not confirmed, be contradicted 



PUBLICITY OF ACCOUNTS 25 

and swept away, thus leaving the concerns before under sus- 
picion in all the better credit and standing. 

Not only should all this be done now, but the State Legis- 
lature should be equally prompt in passing the laws necessary 
to maintain this high standard of publicity in the future, 
making it mandatory upon the banking and insurance depart- 
ments to order frequent examinations into the condition of all 
State banks and banking and insurance concerns by expert 
accountants, and publish their findings. All opposition to 
such investigation and publicity is of itself calculated to excite 
suspicion whether it comes from banks, trust companies, life 
insurance officers and trustees, or other concerns, or parties 
in interest. Industrial and other corporations, of all kinds, 
including railways, ought also to be made, by mandatory laws, 
subject to stricter supervision and periodical examination as to 
their financial condition. Hence the Attorney-General of this 
and other States should be invested with new powers to this 
end, and the provisions of the laws should be made mandatory 
upon them. They should call for verified statements of earn- 
ings, profits, expenses, capitalization, indebtedness, dividends, 
property valuations, liabilities and assets so that large corpora- 
tions would cease to be blind pools, and fraud and misrepresen- 
tation would be checked by being exposed; and it is exposure 
and publicity which is most dreaded by those who prefer 
crooked ways to open and above board business methods and 
integrity of purpose. But those who have nothing to hide 
have much to gain from it, and should welcome the lime-light 
of this new era of publicity. Secrecy is only the defense of 
the weak. 

The recent decision of the Supreme Court of the United 
States in the Tobacco and Paper Trust cases, that corporations 
cannot take refuge in secrecy, but must give testimony as to all 
their transactions, when required, even where it is self-incrim- 
inating, is a great victory for the people. It marks the begin- 
ning of a new departure in corporate management by enforcing 
existing laws, and requiring that publicity of accounts, which 
large industrial, railway and other corporations, and most 



26 PUBLICITY AND REFORM 

notably the large industrial trusts, have hitherto so strictly 
guarded against and avoided, after the blind pool fashion. 

The decision is that the law as it stands, giving a witness the 
constitutional privilege of refusing to give testimony tending to 
incriminate himself does not extend to or cover his refusal to 
produce books and- papers that would incriminate his, or any 
other corporation, the immunity being wholly personal. He 
cannot, therefore, assert it either in behalf of a third person or 
a corporation, yet, strange to say, this clear and convincing rea- 
soning has never been put forward by lawyers opposing the 
trusts. But it will make the way of the corporation transgres- 
sor harder in the future. 

It opens the door and clears the way for a thorough, complete 
and public examination of the affairs and accounts of the 
trusts. It removes the first loophole for their escape from 
the consequences of their unlawful acts, and from the exposure 
of their methods of opposing and crushing competitors. They 
will, therefore, become liable to prosecution under the Sher- 
man Anti-Trust Law, and all unlawful combinations, schemes 
and conspiracies will be effectually and permanently broken up. 

This decision is of such vast and far-reaching importance, 
not only to all directly concerned, but to the whole country, that 
its legal effect and its moral influence can hardly be overesti- 
mated. It will probably become as famous in the history of 
the Supreme Court as the Dred Scott decision; and it will pre- 
vent in future the miscarriage of justice for want of evidence 
against corporations, which has so frequently occurred in the 
past. It will also raise the moral tone of corporate manage- 
ment by enforcing publicity before refused, for the decision 
not only applies to all railway and industrial corporations, but 
to banks, trust companies and insurance companies of all kinds. 
It shows that a rigid enforcement of existing laws is alone 
necessary to correct many abuses of long standing. 

The temptation that secret acts and secretive general man- 
agement presents to those disposed to wrongdoing and chi- 
canery, malfeasance, misappropriation and graft can easily be 
imagined; and it can also be as easily inferred that such man- 



PUBLICITY AND REFORM 27 

agement is apt to give rise to suspicions and rumors detrimental 
to the interest of the corporations concerned, and indirectly 
injurious to others. Honesty is not only the best policy, but a 
moral duty, and should be as much the watchword of corpora- 
tions as of individuals, and no man should betray his trust for 
either love or money, whether acting in or out of a corporate 
capacity. 

There is more permanent prosperity, as well as honor, to be 
secured by honest than dishonest means, and to quote the Bible, 
" What does it profit a man if he gain the whole world, and lose 
his own soul? " Yet unscrupulousness in high places of trust 
is often forced upon public attention. This should all be swept 
away as a debasing element in business life, for dishonesty, like 
the upas tree, casts a blighting influence wherever it exists. 

The corruption of judges and juries and the bribing of legis- 
lators should be more abhorrent than larceny itself to every 
captain of industry and all corporate officials, who should have 
equal respect for the truth and their own honor. Great wrong- 
doers should be no more exempt from punishment than small 
offenders and mere millions should furnish no protection to 
them. 

Great fortunes accumulated by monopoly and oppression, and 
other dishonest means, are no credit to their possessors, but 
really a reproach, and the abuse of power by them is a great 
national evil. Every business man should take pride not only 
in his regard for honesty, truth and fair dealing, but in his 
own personal honor, whether he is acting for a corporation or 
himself. We are now on the highroad to the correction of a 
multitude of abuses and the country is to be congratulated upon 
this salutary movement for improvement and reform in our 
business methods. Our great remedy is PUBLICITY, and the 
enforcement of the law. 

The immensity and grandeur of our national progress and 
achievements justify us in looking forward to a still greater 
and grander development in the future and still more splendid 
triumphs of mind over matter than we have already accom- 
plished. 



28 PUBLICITY AND REFORM 

I do not say with the spread-eagle Fourth of July orator: 

" No pent up Utica controls our powers, 
But the whole boundless continent is ours." 

Yet it cannot be ignored that no other nation has such a 
magnificent career of expansion, development and progress he- 
fore it as the United States, united as it is by telegraph and 
telephone and our vast network of railways, from the Atlantic 
to the Pacific, and Maine to Florida, in unbroken continuity. 

With the growth of our population, which even now exceeds 
eighty millions, we shall grow more and more in national im- 
portance and wealth, not only in material wealth but in the 
higher products of an advancing civilization, in the arts and 
sciences and literature, and all that embellishes and glorifies 
our nature. Therefore we should, as we go along, constantly 
endeavor to correct errors, shortcomings and abuses, and prune 
away rotten and unsound timbers in our public and business life, 
and make the whole machinery of business and activities of all 
kinds — trade, banking, insurance, manufacturing, legislation, 
and the various professions and mechanical industries, work 
as legitimately, honestly, smoothly and harmoniously as possi- 
ble. We can do this by promoting public spirit, and sweeping 
away the opportunities for business wrong-doing in secret, such 
as rebating, by wise laws properly enforced, and backed by pub- 
lic opinion, yet the laws not oppressive, unjust or too inquisi- 
torial. This would compel the " crooks," " grafters," " re- 
baters " and " competition crushers " of the business world, who 
have schemed in darkness, and shunned the light, to come out 
into the open view, and this publicity alone would be a perfect 
cure for many great evils. So let us have more light — the 
light of PUBLICITY. 



THE MONETARY SITUATION AND ITS REMEDIES 

Address delivered before the West Virginia Banking Association 
at their 13th Anniversary meeting at Elkins, West Virginia, June 19, 
1906. 

THE rapid growth of our population, the great activity 
of all our industries, the general prosperity of the 
country, apart from the terrible calamity at San Fran- 
cisco, and the immense speculation going on in land and mining 
ventures, especially in the West, are the underlying causes of 
the severe monetary stringency that New York has lately ex- 
perienced. These influences have kept money to a much larger 
extent than usual active in the interior, and prevented its con- 
centration not only in New York and the other Eastern mon- 
etary centres, but at the Western centres.. 

Chicago,. in particular, found that money, instead of return- 
ing there from the interior in good volume, as it usually does 
in January, February and March, continued this year to be 
sent to the interior by the banks there, at an average rate of 
$12,000,000 a month, during these three months. This move- 
ment was not so much owing to the land and mining boom as to 
the immense absorption of money in the various manufacturing, 
mercantile and other expanding business interests all over the 
West and South. So great was, and still is, the activity in 
these directions that speculation in grain, provisions and stocks 
has been more neglected in the West than for several years, 
as the narrowness of the markets there has shown. 

To show more precisely the effect on the money markets of 
this unusually great speculative and industrial activity it is 
only necessary to say that, during this first quarter of the year 
1906, the Chicago banks steadily and heavily lost in deposits, 
while their loans kept increasing. A comparison of the condi- 
29 



SO THE MONETARY SITUATION 

tion of the national banks in that city on April 6th, as reported 
to the Comptroller of the Currency, with their condition at the 
date of their previous report on January 29th, showed an in- 
crease in their loans of $8,625,237 (or 4.11 per cent.) and a 
decrease in their deposits of $6,773,490 (or 2.11 per cent.) and 
a decrease in cash resources of $14,628,960, or 10.38 per cent. 
These figures explain why money was so scarce in New York. 
The West had none to send us, although there is more money 
in circulation than ever before. If we go back to the condition 
of the same Chicago banks on March 14th, 1905, and compare 
it with their report referred to, we still find that their deposits 
decreased $8,687,117 and their cash resources $7,970,318, while 
their loans increased $1,599,774; and in their reduced cash re- 
sources the Chicago banks reflected the condition of the banks 
in all the other large cities of the West, Northwest and South- 
west. There has been a rapidly rising volume of trade and 
land and mining speculation there for more than a year, and 
enormous activity in new industrial enterprises. In the South- 
west, particularly, the growth of banking has been not only 
unprecedented but enormous. I include in this designation the 
States of Missouri, Arkansas, Louisiana, Texas and Kansas 
and the Territories of Oklahoma, Indian, New Mexico and 
Arizona. The last decade has witnessed in this section of our 
country more extensive and rapid material development than 
was ever before seen either in the United States or elsewhere, 
and this expansion in banking was in response to that material 
development, and therefore had a legitimate foundation in busi- 
ness requirements. American spirit and enterprise, and West- 
ern push, overcame all obstacles in spreading civilization and 
creating trade, especially in the new settlements. 

In the five years ending with 1900, 101 new national and 
other banking institutions were established in these nine States 
and Territories — with a consequent increase of $94,500,000 
in individual deposits and $150,300,000 in aggregate resources, 
and in the next five years ending with 1905 no fewer than 
1,415 new banks and banking institutions were added to the 
number — a resulting increase of $73,400,000 in capital and 



BANKING DEVELOPMENT 31 

surplus, $383,750,000 in individual deposits and $670,350,000 in 
aggregate resources. Thus, in ten years, there was an increase 
of 1,516 in the number of banks, of $137,000,000 in capital 
and surplus, of which $79,000,000 was surplus, of $478,000,- 
000 in individual deposits, and of $820,750,000 in aggregate 
resources. 

This enormous banking development reflected and stimu- 
lated the enormous development of the country, and aided trade 
fully as much as trade helped the banks. The one kept pace 
with the other, and marvellous progress in both was the result; 
and this progress continues, and will continue indefinitely under 
the stimulus of the rapidly increasing population of that still 
sparsely settled section. 

This banking development is of incalculable benefit, both lo- 
cally and generally, for its influence is far-reaching. The 
drain of money from the outlying districts including New 
York, to move the crops, is reduced as banking facilities in the 
West and South increase. 

In the South, during the same period, there has also been 
very great commercial and banking development, with the banks 
and trade going hand in hand to help each other, as in the 
Southwest. The South was never before so active and pros- 
perous; and, rapidly as it is progressing, it will go on pros- 
pering with unabated vigor and enterprise, for it has entered 
upon a new era of prosperity and immense development of its 
material resources awaits it. In manufacturing and mining, 
as well as agriculture, immense opportunities are open to it; 
and before long the natural increase of its population will be 
largely added to by the white emigration that it needs. So 
the South has a bright and magnificent future. 

This vast industrial and mercantile activity — this general 
business enterprise, this land and mining speculation, or boom, 
has extended, in various degrees, all over the United States, 
and the influence it has had on the money market in large 
cities, and particularly in New York, was only a natural and 
easily foreseen result. It has produced a corresponding ac- 
tivity in money, because of the greater demand for its use; 



32 THE MONETARY SITUATION 

and the real estate speculation, the vastest we have to deal 
with, is still increasing. 

The boom is almost entirely in land and mostly in vacant 
plots, or lots, suitable for building purposes; but there is also 
a very active speculation in improved property, and much spec- 
ulative building. The amount of money practically locked up 
in this land speculation is much larger than is generally sup- 



Statistics of 29 of the largest cities of the United States show 
that in the month of May, 1906, they issued permits for the con- 
struction of 13,712 new buildings, to cost $55,074,761, against 
only 12,036 in May, 1905, to cost $50,791,738, an increase of 8 
per cent., and a similar increase was shown in each preceding 
month of 1906. The May increase was greatest in cities re- 
mote from the Atlantic Coast: in Portland, Oregon, it was 309 
per cent.; in Tacoma, 111 per cent.; in Seattle, 30 per cent. 
But the San Francisco catastrophe was evidently the main 
cause of the large increase in Portland and Tacoma. Yet the 
increase in Omaha was 75 per cent., in St. Paul 49 per cent., 
in Duluth 110 per cent., in Louisville 50 per cent., in New 
Orleans 47 per cent, and in Chicago 39 per cent. These 
figures, dry as they may seem, are eloquent in their suggestive- 
ness of the extent of the demand for money from this one 
source, the land and building boom. 

Gold and silver mining speculation, too, last year began 
to assume the dimensions of a boom in Nevada, and all the old 
metal and mineral mining camps, and many new ones in 
other States, are, like the Lake Michigan copper regions, scenes 
of active speculation in properties, as well as busy with mining, 
and hosts of speculators are their own bankers, carrying large 
amounts of currency in their pockets. 

The money that usually returns to the money centres is 
thus widely scattered and too busily employed to return. So 
we have to deal with a period of prosperity and industrial 
activity that is something more than normal. But — without 
referring to the heavy drain of cash for the relief of San Fran- 
cisco, which was offset by gold imports — although money was 



CURRENCY REFORM 33 

scarce in New York, owing to this enormous activity and gen- 
eral prosperity that kept it moving from hand to hand, it was 
not scarce enough to justify the excessively high rates we 
often witness on the Stock Exchange. These were serious and 
hurtful, and to guard against such vicissitudes in our money 
market every member of the Stock Exchange and every banker 
and bank officer should use his influence. 

How far the Chamber of Commerce Committee on the Re- 
form of the Currency will succeed in providing remedies for 
the monetary situation remains to be seen. But from the twen- 
ty-seven questions it has sent to bankers and others it is ap- 
parent that it contemplates no fundamental change in our cur- 
rency system. Inferentially, it will not interfere with United 
States legal tender notes, nor with United States bonds as a 
basis for the circulation of the national banks. Yet both bases 
are indefensible on sound economic principles. The issue of 
greenbacks was merely a war measure, and intended to serve 
only a temporary purpose; instead of which we have made it 
permanent, so keeping the Government in the banking business 
with its war currency system. 

There can be no question as to the false bottom on which 
the national bank currency rests; for paper, that is, paper 
money, should not be secured by, or redeemed in paper, even 
when that paper is as indisputably good as United States bonds. 
All our paper money ought to be based on readily convertible 
assets and redeemable in gold. Bonds, even United States 
bonds, by which national bank notes are now secured, are only 
evidences of debt, and the time will come when these will be 
liquidated, and the sooner the better. 

The committee probably thinks that the existing order of 
things, notwithstanding its fundamental errors, is too deeply 
rooted and strongly fortified to be materially changed without 
danger of the remedy proving worse than the disease. It 
consequently favors more national bank currency on the present 
basis. Branch banks and rediscounting for small banks by 
large banks, are also favored. The committee's questions indi- 
cate, however, that it favors the abolition of the Sub-Treasury 



34 THE MONETARY SITUATION 

system, and to that result it should resolutely bend its energies. 
At present the Sub-Treasuries are practically banks, like the 
old United States Bank at Philadelphia, with the important 
difference against them that all the money they take in remains 
locked up in their vaults until paid out on Treasury drafts. 
The evil effect on the money market and particularly on Wall 
Street, of thus withholding money from circulation in periods 
of stringency has been too often felt. It was more than usu- 
ally conspicuous and severe during the late tight money ordeal, 
owing to the Treasury receipts very largely exceeding its dis- 
bursements. This greatly aggravated the scarcity of money 
in New York, due to other causes, and resulted, in Wall Street, 
in the rates for call loans ranging at times, within the last 
six months, with rapid and eccentric fluctuations, from 15 to 
SO per cent., and on one occasion touching 125 per cent. We 
have here a phenomenon entirely distinct from ordinary mon- 
etary conditions. 

These extremely high and highly fluctuating rates are, it is 
true, peculiar to the New York Stock Exchange, but they are 
none the less a great evil, and they acquire national and even 
international importance from the fact that New York is the 
financial centre of the country and the New York Stock Ex- 
change the barometer of financial values for the whole United 
States. 

However much our commanding position may in other re- 
spects fit New York to be the world's financial centre, it cannot 
aspire to and secure that position of power so long as it is 
the scene of these violent fluctuations in the rates of interest for 
call loans on the Stock Exchange. Measures should therefore 
be taken, not only to prevent them, but to make their recur- 
rence impossible; and how this can be best and most efficiently 
accomplished is a matter for very serious consideration. 

That it can be accomplished is evident from the entire ab- 
sence of any such violent oscillations in the money markets 
of Europe. There the rates of interest fluctuate slowly within 
a reasonably narrow range, generally between 3 and 5 per cent., 



CURRENCY REFORM 35 

the extremes being 1 or 2 above, or below, these figures. Such 
unreasonable eruptions in the money market as we have some- 
times seen in the loan crowd of the New York Stock Exchange 
were never seen, and would be impossible, in London, Paris, 
Berlin or any other European capital. Why, then, should 
they ever occur, or be possible here? 

In response to questions propounded by the Chamber of 
Commerce Committee I would say that, as the Sub-Treasury 
system is a disturbing factor in the money market, provision 
should be made by Congress for the regular deposit in national 
banks of surplus Government money above its regular working 
balance of fifty millions, the banks to pay interest at 2 per 
cent, per annum thereon. 

Bank notes, in my opinion, are a form of bank obligation 
the same in principle as bank deposits, payable on demand, and 
these notes, as the most convenient form of credit, should be 
released as much as possible from restrictions not necessary to 
secure their safety, acceptability and redemption in gold, or 
United States legal tender notes, for so long as the latter 
may be kept outstanding. 

In seeking increased flexibility for our currency I would not 
suggest anything that would impair the value of United States 
bonds as a basis of circulation; but it deserves consideration 
whether new currency might not be issued by moderately in- 
creasing, above the par of the bonds but not above their 
average market value, the amount of notes to be secured by 
them. Then, too, why should not national banks be authorized 
to issue a fixed proportion of circulating notes upon their gen- 
eral resources, these to be secured by a guaranty fund? To 
induce the retirement of these notes when not needed, owing 
to money being superabundant at low rates, this asset circulation 
could be made liable to a graduated tax. The proportion of 
notes to capital that should be allowed, and the amount of the 
tax, are matters upon which bankers differ, but I favor strict 
moderation in both. This asset currency, under moderate re- 
strictions, for use under ordinary conditions, would be far pref- 



36 THE MONETARY SITUATION 

erable to any emergency circulation, ISSUED UNDER A 
HIGH TAX, although Secretary Shaw recommended it in his 
report for 1905. 

As the taxes collected upon the circulation of national banks 
from 1864 to the end of June, 1905, amounted to $96,220,997, 
and the failed banks, during that period, had outstanding only 
$17,295,748 of notes, and the dividends paid on their claims 
averaged 77-95 per cent., it follows, at the same ratable pro- 
portion of loss, that the deficiency on account of their notes 
would have been only $3,813,712, or 22.05 per cent, of their 
total circulation. So, in the light of this experience, I see no 
great risk in a guaranty fund, consisting of the taxes paid 
upon circulation, nor do I see why it would not be sufficient to 
redeem all the notes of failed banks. 

I would make the asset currency a first lien upon the assets 
of the issuing banks, and allow the banks to redeem their notes 
at appointed redemption places in the large cities. This would 
save the trouble and delay of sending them to Washington, and 
by facilitating redemptions when money was easy, give more 
ebb and flow to the currency and tend to prevent excessive 
speculation in times when there is a glut of money. Under 
the Canadian banking system there are several central re- 
demption cities for bank notes; but I would not, as is the case 
in Canada, limit the right to issue notes to banks of not less 
capital than $500,000. There is safety in numbers, in regard 
to banks as well as other matters. Then, too, it would be 
well to make all the Sub-Treasuries in the country useful as 
national bank note redemption points, because it would con- 
tribute to the elasticity of the currency in the same way that it 
does in Canada, and doubtless Congress would favor such a 
measure. 

The proposition to establish a new bank in Wall Street with 
$50,000,000, or even more, capital, or to increase the capital 
of an existing bank to that extent, to serve the purposes of 
Stock Exchange borrowers, and regulate rates of interest, after 
the manner of the Bank of England, is deserving of no con- 
sideration whatever. It would merely excite and provoke the 



NO CENTRAL BANK WANTED 37 

jealousy and opposition of other banking institutions, and 
create a sort of monopoly with special privileges, without secur- 
ing the end in view. A Bank of Banks is not what we want, 
nor do we want a revival of the old United States Bank. 

Such a bank as the Bank of England, or the Bank of France, 
could not be created here, either in a day or a generation, for 
those time-honored institutions are the growth of ages. They 
are very much older than any of the other banks there; and, 
under the control of their respective governments, they have 
grown up with their countries and become practically, although 
not by ownership, government institutions. Hence their pres- 
tige and power, and the impossibility of other banks supersed- 
ing them. 

It may, however, deserve consideration whether the New 
York Clearing House might not exert power in regulating rates 
of interest similar to that exercised by the Bank of England 4 
providing the banks belonging to it would unite to give it that 
power; and is there any reason why they should not? Even 
without any formal or concentrated action in this direction, out- 
side of the Clearing House Committee, it could appoint a com- 
mittee to name every week, or oftener when necessary, as the 
Bank of England does, a minimum rate of interest on call 
loans and discounts. It could also fix a maximum rate for 
each. This need not be compulsory; but even only as a recom- 
mendation, it would have a powerful moral effect, and the Wall 
Street banks, if they approved of the innovation, would con- 
form to it. The Clearing House could, indeed, after the 
formal approval of this regulation by its members, enforce its 
observance under penalties, if deemed necessary. In this alone, 
in my opinion, a practical remedy would be found for the high 
rate evil on the Stock Exchange. 

But, at the same time, greater elasticity could be given to 
our national bank currency if Congress would amend the law 
so as to permit of currency being issued against specified bank 
assets, subject to the approval of the Comptroller of the Cur- 
rency. This is a feature of the banking system of other coun- 
tries, which has always worked very well and to the satisfac- 



38 THE MONETARY SITUATION 

tion of all interests; and what our currency urgently needs is 
greater elasticity. 

Strictly speaking, according to economic principles, we can- 
not expect a perfect currency, with all the resiliency and 
elasticity possible in a currency, so long as bonds, instead of 
gold are used as the basis of our bank circulation. Yet for 
security the bonds are, under present conditions, just as good 
as gold; and there would be more elasticity in the bank circu- 
lation based upon them if the restrictions imposed upon their 
redemption by the Act of 1882, which are now unnecessary, 
were removed. Indeed, the inability to promptly retire bank 
notes is one of the worst faults of our system, and Congress 
should repeal the restrictions without delay. If this obstacle 
in the way of resiliency were removed, and the unlimited re- 
tirement of bank notes permitted, we may rest assured that free 
expansion, when demanded, would quickly follow curtailment, 
and this ebb and flow of the currency would obviously be an 
elastic movement. 

As it is, there is a great waste of banking power in our 
treatment of national bank notes and reserves. We have $544,- 
765,959 of national bank notes, and only $337,130,321 of 
United States legal tender notes, and, setting gold aside, the 
redemption of the former in the latter is obviously absurd and 
inconsistent with sound finance and good banking. We see in 
the present system this $544,765,959 of banking capital ab- 
sorbed and represented by non-reserve currency. The capital 
is perfectly safe, but it is locked out of any other use, and 
rendered inefficient for any other purpose. This calls for a 
remedy. The percentage of reserves to loans in national banks 
has decreased from more than 20 per cent, in 1898 to less than 
15 per cent. Hence the bank reserves require to be in- 
creased. 

The law relating to the redemption of national bank notes 
in United States notes, or greenbacks, was passed when the 
greenbacks very largely exceeded the bank notes in amount; 
but the reversal of these conditions reminds us that the tail is 



GOLD SHIPMENTS ABROAD 39 

now wagging the dog. This alone makes it clear that the law 
should be amended. 

But beyond all this we should open our money market more 
to the rest of the world by establishing a new factor, which 
would always afford prompt relief in times of stringency, by 
giving us cable transfers of gold, instead of gold shipments, 
and of itself prevent abnormally high rates. Through this 
medium we could, instantly, practically draw gold from Europe 
whenever wanted, and Europe could do the same from us, when 
needed there. I refer to the establishment of an International 
Gold Transfer System, or Clearing House, to supersede and 
dispense with what I may call the old-fashioned gold see-saw. 
Gold in circulation is doing good work, but gold see-sawing 
across the ocean is going to waste. The custom of shipping 
gold from one country to another, in response to the ups and 
downs of the market rates for foreign exchange, not only 
reminds me of the forward-and-back movement in a quadrille, 
but suggests that, as the precious metal is rendered practically 
useless while in transit, it should not be used in a dance of 
that kind across the ocean. The subject may not seem to be 
very important, but it really is so, for " tall oaks from little 
acorns grow; " and it is surprising that in the march of modern 
improvement this method of settling international balances has 
not been superseded by a shorter, quicker and cheaper cut to 
transatlantic adjustments. Bankers, in both hemispheres, are 
absurdly behind this progressive and electric age, in transport- 
ing gold from the New World to the Old, and vice versa, to 
adjust balances between them, whenever the rates of exchange 
show a profit in the transaction. That they could profitably 
dispense with it is obvious, as they could easily establish this 
transfer system, this international clearing house for gold, at 
very small expense. Thus the risk, and loss of time, involved 
in the old-fashioned method would be eliminated, while the 
new arrangement, being under their own control would, beyond 
peradventure, serve every necessary purpose of the shippers, 
combined with perfect safety. 



40 THE MONETARY SITUATION 

The disadvantage of shipping boxes or kegs of gold to and 
fro between America and Europe is apparent when we consider 
that it is a time-wasting see-saw performance., which involves 
the expense of packing, cartage, freightage, insurance and loss 
of interest while in transit, and still greater loss due to abra- 
sion consequent on sea transportation, to say nothing of bank- 
ers' commissions, and risk of partial or entire loss by robbery, 
accident or marine disaster; ignoring, moreover, the restraints 
it imposes upon our foreign trade. 

All these disadvantages could be obviated and this handicap 
upon our commerce removed by a mutual-interest arrangement, 
between the leading banks in the United States and Europe, 
to deposit a sufficiently large amount of gold on each side of 
the Atlantic, and issue international clearing house certificates 
and draw bills of exchange against the deposits. This gold 
could be counted as part of their reserve, if in their 
own vaults ; or the Bank of England, in London, and the United 
States Sub-Treasury in Wall Street, could be used as the gold 
depositaries. We have a clearing house for bank checks in 
each of the large cities, and one also for the transactions of 
the New York Stock Exchange. London, too, has its bank 
clearing house. Why, then, should the clearing house system 
not be extended to international transfers of gold, so as to 
make them possible at any moment by cable-telegraph instead 
of the slow process of six-days transfers ? In this way our in- 
ternational dealings would be quickened and extended and our 
financial and commercial relations become more intimate. 

There is no good reason why we should unnecessarily treat 
gold as we do, when we can save time, money and risk by 
keeping the metal where it is, and issuing certificates of deposit 
against it, and the use and transfer of which would serve as 
well as gold shipments. 

The present custom becomes a ridiculous chasse across the 
Atlantic, when we see the same gold shipped to Europe, then 
shipped back to America within a few days after reaching 
its destination, without being unpacked, owing to sudden in- 
tervening changes in the rates of exchange, making it profita- 



GOLD SHIPMENTS ABROAD 41 

ble for the former gold exporting country to import the metal. 
Such wasteful shilly-shally procedure would be likely to excite 
mirth in opera bouffe, but bankers who ship gold are very 
serious about it, and seem to be without enough perception of 
the ludicrous to see anything funny in its coming and going, 
although they feel the shoe pinch in its costliness in both time 
and money. As the world's gold production increases the 
urgent need of this over-sea change will become more and 
more conspicuous and its adoption will accord with the gen- 
erally progressive spirit and methods of our telegraphic and 
telephonic age. 

Had such an international gold clearing house existed the 
sagacious but unprecedented action of the Secretary of the 
Treasury, to relieve the money market by making deposits, as 
secured loans, in certain banks, to encourage and cover their 
prospective gold importations from Europe, the same to be 
returned on the arrival of the gold, would have been unneces- 
sary. While this expedient has well served a temporary pur- 
pose, it is not to be relied upon as a permanent source of relief 
during monetary stress, and it involves a stretch of authority 
under the law that is open to grave objection. But, as it hap- 
pened, the Secretary's action, which was taken just before the 
San Francisco disaster occurred, proved particularly fortunate, 
and probably prevented a very serious aggravation of the strin- 
gency in the money market, owing to the heavy remittances to 
California. It was a piece of good luck that seemed almost 
providential, and the end justified the means. But it should 
always be regarded as only a fortuitous circumstance and tem- 
porary expedient, not as a permanent source of relief; and it 
emphasizes our need of a new international gold transfer sys- 
tem. Moreover, the benefit Europe would derive from it would 
be equal to our own. 

The Secretary, under the circumstances, acted wisely in also 
increasing the Treasury deposits in the national banks, while 
the Government's receipts were largely in excess of its dis- 
bursements, so as to offset, as far as possible, this prepon- 
derance of receipts, and lessen the drain of money into the 



42 THE MONETARY SITUATION 

Sub-Treasuries. But this method of relief is, too, only a tem- 
porary expedient, to remedy the evils of the Sub-Treasury sys- 
tem. While the Sub-Treasury system lasts Congress should 
authorize the Secretary to deposit customs, as well as internal 
revenue receipts, in the national bank depositaries, in time of 
stringency, when the Government's receipts exceed its disburse- 
ments, and it has more than a sufficient working balance. The 
Government should, as a compensation to itself, require the 
banks to pay interest at, say, two and one-half or three per cent, 
per annum on such deposits, these not to exceed, in amount, 25 
per cent, of their paid-up and unimpaired capital, and to be 
returnable on demand, but without requiring these special 
deposits to be secured. They should, however, be made a first 
lien upon the assets of the banks. 

If the changes above suggested were made, I am sanguine 
that they would prove to be remedies for the evils and disad- 
vantages under which we now labor, and so increase the sta- 
bility of our money market, and improve and fortify the ma- 
chinery of the whole monetary system, while giving more 
elasticity to the currency. 



INDIVIDUAL AND CORPORATE WEALTH 

Address delivered at the Annual Banquet of the Economic Club 
of Boston, November 24, 1906. 

I WILL begin by saying of our rapidly progressive nation, 
that it is gratifying to observe that the people have 
always taken time to give careful consideration to the 
important economic questions before them, questions which 
have necessarily grown out of the new conditions of our na- 
tional life. It is also a source of satisfaction to note that in 
every emergency, their representatives in Congress and in the 
State Legislatures have been equal to the task of solving the 
problems of the time and making ample provision for their 
needs, in laws and remedies looking to their welfare. 

This augurs well for the future of our institutions, the life 
and success of which depend on care and watchfulness, and the 
preservation of that liberty of which we are told eternal vig- 
ilance is the price. 

An interesting and important question, that commands the at- 
tention of the American people to-day, is whether great indi- 
vidual and corporate wealth is inimical and hostile to their 
welfare, and a menace to our institutions. This question is 
the more interesting because it is now the leading theme of 
argument and agitation by the Socialists, and has been made 
the subject of much discussion by the press and prominent 
men, not only in this country but in Europe. In this way, 
public interest in it has been aroused and public opinion 
elicited more than ever before. The question is important, for, 
although it may appear to many to be more sentimental than 
economic, it has grown to such proportions as to receive the 
serious consideration of legislators and Government authori- 
43 



44 INDIVIDUAL AND 

ties, and it bids fair to be made the subject of new Federal 
statutes when our next Congress convenes. 

Among economists, there has always been some disagreement 
in the definition of wealth. We have Adam Smith's maxim that 
economy is wealth, and John Stuart Mill tells us that to be 
wealthy is to have a large stock of useful articles, or the means 
of purchasing them. Then we have the comprehensive, but 
vague, statement of Lauderdale and of Jevons, who agree that 
wealth consists of all that man desires as useful or delightful 
to him. It would answer no purpose, however, to spend time 
over these nice distinctions, it being sufficient to consider wealth 
to be our worldly possessions, — whether they consist of land, 
buildings, chattels, crops, cattle, factories, merchandise, stocks, 
bonds or money. But primarily and practically all wealth 
comes from Mother Earth and money represents all wealth. 
It is our common measure of value and the medium of ex- 
change all over the world. 

From the dawn of civilization it has been the paramount 
disposition of man to add to his possessions and to aspire to 
higher and better conditions. In this, he is distinguished from 
the lower orders of animal life. It is through the exercise of 
our mental faculties that we are made restless under unsatis- 
factory conditions and fired with a desire for improvement, and 
particularly to improve our own fortunes by increasing our pos- 
sessions. It is this unrest and aspiration that constitute the 
mainspring to human progress, that has given us our cultivated 
fields and teeming harvests, endowed and consecrated our noble 
edifices of learning and religion, built our beautiful cities and 
homes, our great factories and other busy hives of industry. 

From age to age, throughout the progressive economical 
movement of civilized nations, we can trace the gradual growth 
of man's power and wealth, until now these have reached such 
proportions as to be far beyond the most sanguine prophecies 
or expectations of bygone generations. Thus, at the present 
time of prosperity, human genius, energy and productiveness 
were never before so skillfully and so strenuously employed and 
never before have they yielded so abundant a harvest. 



CORPORATE WEALTH 45 

In our own country, especially, where individual opportuni- 
ties are, practically, limitless and where thought and effort 
are exerted to the utmost straining point, most fruitful, indeed, 
has been the result. We have seen that the making of large 
fortunes coincidently with great general prosperity, that is by 
those doing a profitable business on a large scale, is an in- 
evitable economic result. 

The past forty-five years in the United States embrace a new 
era of wealth — an era in which the accumulation of vast 
amounts of money or its equivalent in individual and corporate 
hands, has accompanied the most marvellous national growth 
and prosperity in all history. 

New conditions have arisen, and new methods have had to 
be employed, while new men, equipped with new ideas, have 
not been found wanting to meet all requirements and to keep 
step with the march of progress on land and sea. Unlike the 
people of some of the older countries, where, as in Russia, they 
distrust their Government, Americans do not hoard their wealth. 
They employ it. They have no reason to hoard it. Their 
quickly acquired fortunes are generally lavishly disbursed, both 
in their style of living and their investments. With much of 
the money they put into circulation railroads are built and ex- 
tended, mammoth factories are constructed, labor is employed 
on a larger scale than before, more farms are cultivated and 
more crops are moved and exported. Through all the arteries 
of trade and commerce the wealth thus employed flows and adds 
to the growth and prosperity of the country. 

While the mere hoarding of money by its owners would not 
prove a serious drawback to our national progress, owing to 
our immense natural resources, it can be truly said that the 
American custom of almost immediate reinvestment and circu- 
lation of money has enhanced, in untold measure, our country's 
productiveness, and aided very largely in promoting the public 
welfare and the general prosperity now existing. 

Keeping the wheels of commerce moving, by supplying the 
demands of the financial, mercantile, manufacturing and agri- 
cultural world with the " sinews of war," in the up-to-date 



46 INDIVIDUAL WEALTH 

American way, instead of merely gathering wealth and hiding 
it away, has been, to my mind, one great secret of our unpre- 
cedented national advancement, both at home and abroad, and 
one of its most powerful adjuncts. 

No matter what others may say of the late Russell Sage, it 
is only a just tribute to that financier to state that his great 
wealth was always kept practically in circulation. He kept 
his money working for him day and night, and his loans some- 
times proved an important source of ready supply when the 
banks and trust companies, in crucial times, had no money to 
lend. He thus met market demands for necessary capital, 
to support, maintain and carry on various enterprises, and pre- 
vent great loss and disaster. 

I have taken the liberty of using his name as an illustration, 
for when he died he was in possession of vast wealth — sixty 
to seventy millions — and accredited with having more ready 
money than anyone else in the United States. He was also 
the largest individual money lender in America, but never, 
from any sound point of view, could his wealth be said, in any 
sense, to be a menace or danger to our institutions. Although 
history will never reveal just how important a part this method 
of keeping our wealth in use has played in helping to bring 
about and preserve the generally excellent and prosperous con- 
dition of things, as they now exist, we can safely say that its 
measure in that regard is at least great enough to preclude 
classing great individual wealth as a danger to the country. 

As it is, there is evidence enough to refute much that has been 
said against our men of wealth; and also to show that the hos- 
tile attitude of a portion of the press towards them should 
cease to be popular. As a matter of fact, the assistance which 
Americans of great wealth have given the nation in the found- 
ing and preservation of institutions for the public benefit, and 
in other ways, has never been sufficiently appreciated or ac- 
knowledged. So they have never received the just and fair 
credit to which they were entitled. 

Here on the hallowed and historic ground of the city of 
Boston, — the cradle of liberty, — where the first blood was 



PATRIOTIC RICH MEN 47 

shed in the war for independence, with Bunker Hill and Lex- 
ington still fresh in our memories, let us not forget how well 
and patriotically the wealthy Americans of the Colonial times 
did their part in the War of the Revolution, that made us what 
we are to-day. 

The great John Adams, whose name and memory are held 
in love and reverence by the citizens of this Commonwealth, to 
which he lent such lustre, was a large capitalist for his time. 
He, the great defender of the Declaration of Independence, 
was rich in money as well as patriotism. 

The first signature on that sacred document is that of John 
Hancock, one of the richest men of his time. Thomas Jeffer- 
son, the author of that great Bill of Human Rights, was also 
a rich man. Robert Morris, Treasurer of the Colonial Gov- 
ernment, was a capitalist, and sacrificed his wealth for the 
cause. And George Washington, the Father of His Country, 
was also one of its wealthiest men. 

In that glorious struggle for freedom, these wealthy patriots 
performed a leading and arduous part and aided largely in 
effecting that grand result, — the establishment of this great 
republic, the United States of America, under the best and 
freest Constitution in the world. 

Passing onward from that memorable time, we come to that 
of the Rebellion, when secession reared its aggressive head 
and the very life of our institutions was in extreme jeopardy. 
In the early part of the great Civil War, — when the Govern- 
ment, friendless abroad, knew not which way to turn for the 
financial aid that it so sorely needed to defend itself and 
prosecute the war, — history will recall that the great wealth 
of private individuals proved not a menace, but a blessing and 
a Godsend to the Nation. These served their country well by 
coming forward with their wealth, and buying United States 
bonds in large amounts. By so doing they rendered patriotic 
public service that should make even the Socialists hesitate be- 
fore condemning great individual wealth as dangerous to the 
national welfare. 

We all know of the great wealth of one individual, namely, 



48 INDIVIDUAL WEALTH 

Senator Leland Stanford of California, that was generously 
and munificently bestowed in establishing the great Stanford 
University, where, in sight of the Golden Gate, thousands of 
the youth of the Pacific Coast can obtain a college education of 
the highest class, whether they are able to pay for it or not. 
We know, too, how millions of the great wealth of John D. 
Rockefeller were freely dedicated to that grand seat of learn- 
ing, the Chicago University, and to the maintenance of which 
his wealth continues to flow, with the worthy object of devel- 
oping American brain and character. I might mention other 
instances, almost without number, where, from Maine to Texas, 
under the beneficent rays of great gifts of the wealthy, the 
seeds of education have been sown broadcast and have grown 
into grand and telling factors in shaping the character of 
the rising generation of American manhood, and the destiny 
of this great country. Standing out as the brightest star in 
this galaxy, will shine the name of Andrew Carnegie, a man 
quite as notable for his philanthropies as for his finan- 
cial acumen; and those hundreds of Carnegie Libraries, erected 
at the cost of many millions, will ever stand as lasting monu- 
ments to his memory, and be a living refutation of the calum- 
nies directed against aggregated wealth. Already he has given 
away $60,000,000 ! Think of it! Look also at J. Pierpont 
Morgan and D. O. Mills, among men of great wealth. Mr. 
Morgan has given his time and millions in a princely fashion 
and searched the palaces and storehouses of the Old World, 
to make our country .one of the greatest art centres of the 
world, and Mr. Mills has proved himself a true philanthropist 
by doing much good for mankind in the amelioration of the 
condition of the masses in New York. He has provided for 
them decent, sanitary abodes, known as the Mills Hotels, where 
the man with very small means may have good, wholesome food 
and clean and comfortable shelter, without losing his self-re- 
spect. Thousands of Americans will, I am sure, gladly raise their 
voices in unison to acknowledge the benefit thus derived by the 
public from the great wealth of the public-spirited D. O. Mills. 
Innumerable other instances could be recounted, where very 



"TAINTED" MONEY 49 

rich men have so directed the distribution of their wealth as 
to do great good, not only for the present generation, but for 
generations to come. In so doing, they have sought to perpet- 
uate the good they did for the common welfare. In these we 
have practical illustrations of great individual wealth being a 
public benefit, and not a detriment. 

It was indeed well for the people of this country that these 
great fortunes were in the possession of these individuals, for 
otherwise our institutions of learning, culture and charity would 
not have been blessed with these manifold benefactions. This 
wealth, held together in this way, enabled the single mind of 
the owner to direct its distribution into the particular channels 
where he desired it to do good. 

A great amount of wealth in the hands of one person enables 
him to direct it to the establishment of extensive productive 
industries and other large schemes requiring much capital. 
These are important, because they aid in developing the coun- 
try and accelerate its progress. Many of our greatest railroad, 
manufacturing, commercial and agricultural enterprises owe 
their development and success to great individual wealth. 

But, notwithstanding the magnificent results and permanent 
benefits to mankind brought about by the possessors of great 
wealth, popular clamor is sometimes senselessly or maliciously 
raised against them. The motive of the public benefactor is 
questioned, and we are told that the capitalist did not have 
such worthy objects in view in the schemes and operations by 
which he made his money. This charge may be entirely true, 
in many instances, but it in no way affects the matter of his 
gifts. The cry of " tainted money " does injustice, very often, 
to the donor and the motive of the donor in giving. 

Edison, Fulton and Morse may, like most men, have been 
inspired in their work and projects by sordid or selfish motives, 
yet this did not lessen the value of their great inventions. 

In keeping with the undeserved abuse of wealth, which is 
entitled to no serious consideration, we are confronted by the 
bold assertion, made by extremists, that some limit should be 
set to the amount of property an individual may own. The 



50 INDIVIDUAL WEALTH 

impracticability and inadvisability of any such measure are at 
once apparent. You might as well try to limit the capacity or 
energy of an individual. When you prevent an individual 
from accumulating you at once discourage his productiveness. 
This is an axiom beyond dispute. 

Let us keep in mind the fact that, as Mr. Carroll D. Wright 
says, while we now have billionaires the poor are growing richer, 
and that, as pointed out by Bernstein, there is a very large 
increase in the number of persons paying taxes; and also, 
that the rich in America now own a smaller proportion of the 
total wealth of the country than they did fifty years ago. In 
view of these facts and the generally good use of wealth, as 
shown by its possessors, it would appear that the objections 
made to great individual wealth are without tangible founda- 
tion. It is the abuse, not the use, of wealth that is to be dep- 
recated. 

With the characteristic American way of keeping wealth ac- 
tively employed and generously distributed, and with the very 
apparent growing sense of heavy personal responsibility that, 
in fortune-building, seems always to develop, there need be 
no fear of any impairment or destruction of the institutions of 
our republic from the accumulation of great individual wealth. 

Let us bear in mind that the vast individual fortunes of 
Americans are nearly all self-made and in the hands of men 
who began life in poor circumstances, and that most of the 
most successful men in business are those who possess high 
character, as well as remarkable capacity, great thrift and 
other good qualities; and that men of this type with great 
wealth have never proved a menace to the public welfare. 

While the great wealth of individuals who accumulated it is, 
as long as they live, apparently safe in their hands — safe for 
themselves and safe for the country at large — these vast 
fortunes, in time, will have all to be transmitted, distributed 
and bequeathed. In the opinion of many thinkers herein lies 
the real danger, if any, of great individual wealth. 

Placed intact in the hands of an heir who neither helped to 
create nor save it, and who may turn out to be incompetent, 



AN INHERITANCE TAX 51 

dishonest, unscrupulous and profligate, it may prove a curse, 
and should society not have some protection against such an 
heir and the social and moral wrongs committed by him in the 
abuse of this wealth? 

President Roosevelt, in a speech delivered this year, at the 
laying of a cornerstone in Washington, said: 

" As a matter of personal conviction and without pretending 
to discuss the details or formulate the system, I feel that we 
shall ultimately have to consider the adoption of some such 
scheme as that of a progressive tax on all fortunes beyond a 
certain amount, either given in life, or devised or bequeathed 
upon death, to any individual — a tax so framed as to put it 
out of the power of the owner of one of these enormous for- 
tunes to hand over more than a certain amount to any one in- 
dividual; the tax of course to be imposed by the National and 
not the State Government. Such taxation should, of course, 
be aimed merely at the inheritance, or transmission in their 
entirety of those fortunes swollen beyond all healthy limits." 

It is my opinion that a law of this kind would prove wise and 
salutary. In a Government like ours there is no question that 
the owner of a great fortune has public functions and respon- 
sibilities that must be recognized ; and an inheritance tax, in the 
first place, so graduated as to encourage the devising of large 
fortunes in several parts, instead of a sole legacy, is desirable. 
This division, if made, would lessen the danger of evils result- 
ing from the misuse of wealth by irresponsible heirs, at the 
same time affording the fortune-builder some measure of as- 
surance that his estate would not at once be dissipated and 
squandered. There would be safety in numbers. 

New laws, too, could with reason be enacted to prevent the 
evil and dissolute use of inherited wealth. So deep a con- 
viction have I that a proper sense of responsibility comes only 
with earning and saving wealth, that I have often thought it 
a meet and just way for a man to distribute an estate by first 
providing for his family and then dividing the remainder 
among the employees who had served him faithfully and aided 
him to amass his fortune. 



52 CORPORATE WEALTH 

I will now take up the subject of corporate wealth. All 
corporations are bodies made up of individuals, and as the 
parts are so the whole must be. It has been frequently asserted 
that for a corporation to be successful, its members must be 
less honest, fair and square than an individual engaged in 
business. This is an erroneous supposition. Honesty is the 
best policy for both. 

Beginning where the individual finds his limit and associated 
effort is required, the corporation, limiting as it does the per- 
sonal Liability of its members, or stockholders, under the law, 
naturally lessens the sense of individual responsibility. The 
result often is that corporate bodies are conducted by practically 
irresponsible officers and managers, and in such ways as to 
develop grave danger to the public good. That this is so, no 
one who has kept informed of the quite recent exposures of 
the so-called trusts in various States can gainsay. But, while 
we must not condone the wrongdoing of these corporation 
managers, we must not unthinkingly charge the blame to great 
corporate wealth alone, because bad measures and bad methods 
are often carried out. It is here that the law in its supremacy 
has stepped in. Under the provisions of the Sherman Anti- 
Trust law, the Elkins Anti-Rebate law and other and later 
restraining statutes, condign punishment will, doubtless, be dealt 
out to offenders, and a rigid enforcement of these laws will be 
sufficient to regulate the corporate bodies and stand as an aegis 
of protection for the nation. 

Much that I have said upon the subject of great individual 
wealth applies with like force to corporate wealth. Corpora- 
tions, simply as such, must not be decried, for they have become 
necessary to the successful conduct of business and they in 
many ways accomplish good results that could not be attained 
with equal facility by individuals. 

As Americans, let us remember that the eventful voyage of 
the Pilgrims to America was the result of combined or asso- 
ciated effort, the success of which was made possible by English 
capital, got together from various sources. 

The voyage to Plymouth was made under an English patent, 



ECONOMY IN PRODUCTION 53 

or charter, and was practically the work of a corporation, and in 
all probability it was in this way only that they could have 
ever achieved their object of reaching our shores. 

Large aggregations of capital, notwithstanding the frequent 
shortcomings and wrongdoing in the use they are put to, rest 
upon principles that are sound, and they have done, and are 
doing, a vast amount of good work and have made practicable 
a great deal that would have been impracticable by individuals. 

Rich and powerful industrial corporations, the combinations 
called trusts, although discredited by many, who regard them 
with suspicion and disfavor, are, by reason of their combined 
forces, in a position to do a great deal of good for the people 
generally, and doubtless those honestly conducted prove a pub- 
lic benefit. 

Owing to their large capital and almost unlimited means of 
getting more capital, and their extensive trade, they are in quick 
touch with all the markets and command the world's best ma- 
terial. Thus they are in a position to buy in the largest 
quantities and at the lowest prices. They employ the highest 
skilled labor and are quick to observe unusual merit and to 
detect peculiar skill and aptitude in the different departments 
of their vast establishments. These are placed in charge of 
men usually taken from the ranks, who are paid generous 
salaries, which are doubtless fully earned by them in the care 
and direction of the company's interests. Their promotion 
system creates a strong incentive for a display of skill and 
fidelity among the employees, and it opens to them a degree of 
opportunity for advancement and self -betterment never before 
known. The great corporations can afford to purchase every 
valuable invention and patent that they want and set up the 
largest improved machinery adapted to the different processes 
of their establishments, and can make large savings in freight 
charges by taking advantage of the rates for carload and very 
heavy shipments. All this naturally tends to reduce the cost 
of production or manufacture and the reduction of the price 
paid by the consumer; therefore in these respects, and divers 
other ways, the public welfare should be promoted by the trusts, 



54 CORPORATE WEALTH 

however much they may injure their competitors in business. 

Honest captains of industry, associating themselves together 
for the establishment and conduct of a broad corporate enter- 
prise, should be welcomed by the public. Our large industrial 
corporations are to-day the leaders in our business life, and 
conservative investors buy their stocks and bonds and so reap 
a share of their profits. In this age of great corporations, 
which in the past decade have increased very rapidly, it is not 
altogether surprising that sometimes we hear of corrupt and 
reckless management, involving excessive expenditures, illegal 
and even criminal speculative use of corporate funds, together 
with false statements as to financial conditions and other ir- 
regularities. But these isolated instances should not be taken 
as at all common, for the great corporations are generally well 
and honestly managed. 

Yet toward competitors they have too often been unscrupu- 
lous, just as the railways were in giving rebates to control the 
heavy traffic. These illegal and reprehensible methods were 
pursued far too long, not only causing immense personal and 
commercial loss and injury, but shaking the confidence of the 
public in large corporations. These offenses can, however, un- 
der our new railway laws, hardly be repeated in the future. 

Such illegal acts should not, of course, be charged against 
great corporate wealth, for the offenders in committing them 
have violated the laws and they alone should be condemned 
therefor, just as the individual criminal, and no one else, 
should bear the shame and opprobium of his act and suffer 
the penalty. 

Yet the existing laws seem inadequate. It is due to the 
sound corporations of the country, as well as to the public, 
that something further should be provided to overcome the 
feeling of suspicion toward them and to keep the people in- 
formed as to their existing methods and the true condition of 
their affairs. 

The remedy for corporation wrongdoing is found in pub- 
licity! This publicity is the great need of the day, and the 
public should demand it. 



PUBLICITY OF ACCOUNTS 55 

In a recent address delivered by me before the Wharton 
School of Finance of the University of Pennsylvania, I urged 
that the New York Legislature, as well as the Legislatures of 
the other States, should respond to the popular agitation for this 
publicity by passing laws requiring all corporations to make 
at least semi-annual reports of their condition, certified to by 
registered public accountants, with power invested in the State 
superintendents to order special examinations by such account- 
ants at any time when deemed necessary — that is, when- 
ever any of them were suspected of being unsound or irregular 
in their business methods. This should be done for the pro- 
tection of others, as well as to clear themselves of suspicion 
and restore their credit where they were found to be sound 
and straight in their methods. Only the insolvent and the 
crooked would have anything to fear from this wholesome pub- 
licity. In this way disaster might be averted and impaired 
confidence promptly restored. I lay stress upon the employ- 
ment of skilled accountants, because the certified results of 
their examination would be accepted as conclusive of the actual 
conditions being as they stated. They would speak with au- 
thority. 

Providence has, however, been kind to us, and in every crisis 
and time of need the right man for the occasion has always 
been found. Thus, to the credit of our Government and the 
pride and satisfaction of American citizens, when gross and 
flagrant abuses had so long over-ridden the law as to become 
intolerable, Theodore Roosevelt, with an honesty and courage 
that commanded world-wide admiration, indifferent to all polit- 
ical or other influences, and acting with an eye single to the 
upholding of the rights of the people, called a halt to these 
nefarious methods. He did so by personally causing investiga- 
tions to be made of the acts of these unbridled wrong-doers 
and with summary action caused their prosecution and the en- 
actment of laws that curbed the wrong-doers and gave satisfac- 
tion to the law-abiding American people. 

With the knowledge, then, that the stringent provisions of the 
new laws will be rigidly enforced, and, assuming that other laws 



56 INDIVIDUAL AND 

to the same end will be enacted when found necessary, I, for 
one, see no cause for alarm and no danger or anything hostile to 
the public welfare that cannot be averted or promptly remedied. 

I feel that we can all agree that with the laws of the land 
in the hands of an honest and courageous Executive like Theo- 
dore Roosevelt, great individual and corporate wealth will not 
prove a menace to either the people or the institutions of the 
United States of America. But, just as eternal vigilance is 
the price of liberty, constant watchfulness is necessary to pre- 
vent and punish violations of law that infringe upon the rights 
of the people by either corporations or individuals of great 
wealth, for wealth must never be permitted in any respect to 
either evade the law or make the law.; 

It is almost needless to say that I do not agree with Mrs. 
Hetty Green, who recently said in your city that the people 
were gradually finding out what the trusts were, and when they 
knew more they would rise in revolution against them. This 
sweeping and indiscriminate statement calls for almost as 
much qualification as her further remark that they were as 
bad as the lawyers. But I trust the poor, innocent attorneys 
will be able to stand it as well as the trusts can. 

We all know that there are trusts and trusts and lawyers 
and lawyers, but to class all as bad is a privilege that we can 
only allow to Mrs. Green, who was evidently romancing. Yet 
it is surprising how many romancers of that kind we have 
among us — romancers who knowingly or unknowingly take, 
or mistake, a rotten egg for a fair sample of eggs in general 
and, metaphorically speaking, use it with voice or pen as a 
specimen brick. 

While I believe in holding the trusts to a strict accountability 
and relentlessly exposing and punishing their wrongdoing when- 
ever any of them are found guilty of it, I believe that serious 
wrongdoing among them is exceptional, for wrongdoing is bad 
business policy, and those guilty of it flourish only for a while 
and then go to the wall, like the wicked and the green bay tree 
of Holy Writ. 

So we are in no danger of a revolution from a further ex- 



CORPORATE WEALTH 57. 

posure of the trusts, Mrs. Hetty Green to the contrary notwith- 
standing. The more that any weak, dishonest and corrupt 
spots among them are exposed, punished and eliminated, the bet- 
ter it will be for the sound and honest and law-abiding sort, 
and the more public confidence they will enjoy. 

There is practically no more danger to the community from 
the large aggregations of capital, represented by the trusts, 
than from equally large aggregations in the hands of individ- 
uals, for both are equally controlled by law and influenced 
by public opinion, and public opinion is often more powerful 
than law in righting wrong. What is more, it makes the laws. 

In this country the absence of the law of entail, which is 
such a rubng legal, political and social force in England and 
other European countries, causes large fortunes to be divided 
and rapidly dispersed. There is no eldest son here to inherit 
the paternal estate while his brothers and sisters are put on a 
small allowance. Moreover, the expensive, not to say ex- 
travagant, style of living in which rich Americans indulge 
disposes of a good deal of their money apart from their 
freehanded liberality in donations to institutions, after the man- 
ner of Carnegie, Rockefeller and others of our multi-million- 
aires. 

Russell Sage was an exception to the rule of extravagance 
among our rich men, because he belonged to the plain people 
and had no taste for anything but plain living, and he set a 
good example of the wholesome simple life and honest industry 
and thrift. He was exceptional, too, in leaving his estate un- 
divided, but he left it in good hands, and his widow will, no 
doubt, distribute it wisely in benefactions where it will be likely 
to do the most good. So, reviewing the subject as a whole, 
we have no reason to be apprehensive of evil consequences 
springing from large aggregations of capital, either in cor- 
porate or individual hands, in this country, and our great na- 
tional wealth and prosperity are, as I think all will admit, 
a great national blessing. 



NO DANGER IN GREAT FORTUNES AND GREAT 
CORPORATIONS IN AMERICA 

Address delivered at the Annual Banquet of the Economic Club 
of Providence, R. L, December 8, 1906. 

WE live in a great, prosperous and progressive coun- 
try, blessed with free institutions, of which we have 
good reason to be proud; a country of vast achieve- 
ment and industrial activity, in which immense individual for- 
tunes have been quickly made by successful business enterprise 
on a grand scale; a country with illimitable natural resources 
and advantages, and colossal railway, manufacturing, insurance, 
banking and other corporations and institutions, representing 
enormous aggregations of capital, such as were never before 
known in the Old World or the New. 

All these are eloquently suggestive signs of our splendid na- 
tional development, and they add lustre and magnificence to 
these United States of America, and, without reference to our 
Navy, enhance our power and prestige abroad. They tell of 
the wonders we have accomplished and our country's varied 
and enormous resources, and our accumulated wealth; and they 
furnish unmistakable evidence of our gigantic strides as a 
nation in that forward march which has surprised the world, 
even in this universally progressive age, and surpassed even our 
own sanguine expectations. 

But this great national progress and prosperity, involving 
immense accumulations of property by fortunate individuals 
and industrial combinations has necessarily created glaring in- 
equalities of fortune, and these have provoked a good deal of 
unreasonable discontent and criticism among large numbers of 
the less fortunate masses. In this Malice has combined with 
Envy to throw stones at Capital, and denounce, and hurl epi- 
58 



GREAT FORTUNES 59 

thets, at both the individual and corporate possessors of great 
wealth. 

The Socialists and yellow newspapers have quickened and 
fomented this discontent, and raised a loud outcry against the 
large capitalists and the industrial combinations called Trusts. 
They have denounced them as hostile to the interests of the peo- 
ple, and a source of grave danger to the country, and even to 
our republican form of government. 

In the same spirit, the donations of some of our very rich 
men to laudable public objects, including schools, colleges and 
churches, have been branded as " tainted " money, because of 
the supposed way in which the wealth of the donors was ac- 
quired in business. This was the result of a narrow and 
unjust view of the matter, for money not stolen, but made in 
trade, whether by questionable methods or not, does not carry 
a taint with it when given away. It is indeed purified, if 
purification is necessary, by being bestowed with charitable and 
philanthropic motives, upon worthy institutions or persons. 

To criticise and spurn the offer of surplus wealth in this way, 
from any source, except the proceeds of robbery, is to help to 
dry up, or check, the flow from the fountain of charity, which 
is never too abundant for the demands upon it. The cry of 
tainted money is therefore to be deprecated, as against the 
public interest, for it is discouraging to benevolence by both 
saints and sinners. An old proverb tells us that we should 
never look a gift horse in the mouth. I have spoken of tainted 
money; in connection with that I will tell you a good story: 
" Two Irishmen were talking about the Standard Oil Co. Pat 
said to the other, ' Mike, do you think John D. Rockefeller's 
money is tainted ? ' 

" ' Yes ; I do, Pat, it has two taints on it — 'taint your'n and 
'taint mine.' " 

Those that talk about such money being tainted are to my 
mind less intelligent and just than these two Irishmen. 

To say that there is peril to the nation in large individual 
fortunes and large aggregations of corporate capital is to im- 
agine a danger which does not exist, as in this country there is 



60. INTERNATIONAL MARRIAGES 

no law of entail and great wealth is soon distributed after its 
possessor's death. It takes to itself wings. There is no eldest 
son to inherit the estate so as to properly maintain and add 
dignity to the family name or title while his brothers and sisters 
are left in comparative poverty. We are here all free and 
equal. 

Moreover, rich Americans spend money more freely and 
lavishly and live more luxuriously and expensively than the 
people of any other country, and this tends to keep down or 
reduce large fortunes. Our rich men are also enterprising in 
undertaking large financial, commercial and industrial ventures, 
and generally equally so in their ordinary business and specu- 
lative operations. This does good, for it not only keeps their 
money circulating, but gives employment to labor, stimulates 
trade and aids in the development of our national resources. 

One somewhat amusing result of large fortunes in this coun- 
try has been seen in numerous marriages of American heiresses 
to titled foreigners. Many of these young women with millions, 
widows included, were not wholly satisfied with their wealth. 
Like Oliver Twist, they asked for more — not money, but some- 
thing else. What each one of them wanted was a foreign title. 
It was the missing link, and each was prepared to pay for it, 
and to pay handsomely, cash down on the altar. 

The supply of foreign counts, of no account, and other titled 
grandees of effete aristocracies proved equal to the demand, 
large as it was, and so, along with our gold bars and gold 
coin, we exported American heiresses in large numbers, and 
these have built up the shattered or invisible fortunes of the 
men with whom they linked their own fortunes with hard cash. 

Sometimes they were satisfied with their bargains, but per- 
haps more often they repented of them, and not always at 
leisure, for the newspapers have told us of some who did so 
in a hurry. 

The very unpleasant results of two conspicuous titled French 
marriages recently included, as we all know, dreadful un- 
happiness to the American wives, and finally divorces, which 



RICH MEN AS INVESTORS 61 

to them must have been a happy relief and perfect godsend. 
Many somewhat similar international marriages, resulting from 
this feminine craving for titles, have had similar results, and 
these experiences of their wealthy sisterhood should not be lost 
upon the American heiresses who are still free from the bonds 
of Hymen; that is to say, those who have not yet sold, or ex- 
patriated themselves for that " mess of pottage " or glorified 
gold brick, a title. 

The only danger or disadvantage I can at present see in 
large fortunes in this country is that it may continue to deprive 
many good American men of excellent American wives by 
the exodus of American heiresses to Europe, besides compelling 
us to ship large amounts of gold to pay for their titled hus- 
bands. 

Reverting to economics, let me remind you that there is very 
little idle capital in this country. Wealth is made to produce 
wealth, and there is no political distrust to cause hoarding. 
There is a wide field for the profitable employment of money, 
so it is kept employed in a multitude of channels, all of which 
contribute in various ways to our national growth and pros- 
perity and our greatness among the nations. 

Progress in no other country ever equalled our own, and this 
is largely due to the activity and enterprise of the people in 
productive industries; and be it known our rich men are as 
active and enterprising as the rest. They are as ready as men 
less favored by fortune to seize opportunities for entering upon 
new money-making enterprises, and with their large means and 
singleness and independence of purpose they can often accom- 
plish more than a company of men of smaller means, subject or 
liable to less unity of purpose. 

Our very rich men having been, with an exception or two, 
the architects of their own fortunes, know well how to use their 
wealth. They have become experts in its proper management, 
and there is neither actual danger nor the slightest menace of 
evil to the country in their possession of the power that their 
money gives. Their wealth, too, makes them conservative. 



62 RAILWAY REBATING 

They make good use of their money, because that is the only 
profitable way to use it, and the same remark applies to large 
corporate combinations or trusts. 

For these, as for individuals, in the long run, at least, hon- 
esty is the best policy, and fair dealing is necessary to perma- 
nent success. Weak timbers and corrupt and dishonest spots 
have been disclosed here and there among the trusts, but these 
have been eliminated, corrected or punished, according to law, 
as fast as they were discovered, and a much stricter, if not 
entirely strict, observance of the laws relating to them may be 
relied upon for the future than has been the case in the past. 

This applies particularly to railway rebating, which has lately 
been punished by very heavy fines. So rebating has become a 
very costly misdemeanor for both delinquent corporations and 
individuals, the penalties being levied equally upon the givers 
and the receivers of rebates, as in the recent case against the 
New York Central Railway and the Sugar Trust. 

Railway rebating has ruined or impoverished thousands of 
honest traders. It has built up and fostered monopolies on the 
business ashes of their competitors, and the railways should 
never be suffered in the future to evade the law against it, 
which they have been so expert and unscrupulous in evading 
hitherto. If heavy fines fail to stop this great evil and in- 
justice, let condign punishment be meted out in long terms of 
imprisonment for all offenders. 

The law when enforced holds the trusts strictly to account, 
and prevents them from becoming a source of danger to the 
community. Moreover, the trusts have accomplished much for 
the public benefit that individual enterprise would have been 
unable to do, although they have cut the ground from under 
many small competitors. That this has worked great hardship 
in many cases we all know, but the trusts have probably bene- 
fited by their products far more people than they have injured 
by their monopolistic tendencies and the use they have made 
of their large aggregations of capital in crushing competition. 

The law, however, should be held over them, like an avenging 
sword, to punish wrongdoing on their part and protect the 



BENEFACTIONS OF RICH MEN 63 

rights of the people. To this no honestly disposed corporations, 
large or small, will object, and delinquents should be remorse- 
lessly exposed and prosecuted with the utmost rigor of the law. 
This course will be all the better for the sound, honest and 
law-abiding corporations. The insolvent and the fraudulent 
should have their business secrets laid bare in the bright light 
of that publicity of accounts and methods to which all should 
be subjected. Then the goats could be distinguished from the 
sheep and the sound and honest corporations would escape the 
suspicion that falls more or less upon all when one is known 
or suspected to be weak or erring. 

Therefore I advocate the publicity and periodical examina- 
tion of both corporation methods and corporation accounts, and 
this by the State through skilled accountants. Such publicity, 
with no loophole for whitewashing, would be of itself a power- 
ful deterrent from evil practices and misrepresentation of con- 
ditions. 

The profits of the trusts, of course, find their way into the 
pockets of their stockholders and enrich some of the largest 
beyond the dreams of avarice; but the benefactions of Andrew 
Carnegie and John D. Rockefeller show how well great wealth 
derived from these corporate combinations, these much abused 
trusts, may be used for the benefit of their fellow-citizens. Le- 
land Stanford, of Stanford University fame, D. O. Mills and 
many other heavy stockholders in large corporations have been 
equally public-spirited and munificent in their gifts and invest- 
ments to promote the public welfare. These large capitalists 
have shown that there was no menace to the people's interests 
in the wealth they possessed and that there is no substantial 
foundation for the socialistic cry against the money power 
of great millionaires, any more than there is against the neces- 
sary money power of great corporations when they are honestly 
managed in conformity with law. 

When we hear or read sneers or diatribes against our very 
rich trust millionaires, let us remember that Andrew Carnegie 
has already given away sixty millions of dollars for popular 
libraries and other public purposes. There is no danger or 



64 RICH MEN AS PATRIOTS 

menace in this, not even to himself, for he has probably more 
than three times as much left. 

Great wealth, indeed, naturally makes all men conservative 
and invests them with a sense of responsibility to others and 
to the public that insures their being good and law-abiding citi- 
zens. It makes them practical patriots and up-builders of the 
nation. There are no anarchists among rich men and no radical 
political extremists even among very rich men. 

Wealth in good hands serves good purposes. The richest 
men of the Thirteen Colonies in the American revolution were 
among the most active and self-sacrificing of American patriots. 
They included George Washington, John Adams, John Han- 
cock, Thomas Jefferson and Robert Morris, whose names are 
imperishable on our national roll of fame. 

When the war between North and South broke out in 1861 
our richest men were foremost in offering temporary loans to 
the Government for the defense of the Union, and afterwards 
bought its bonds largely. Their assistance at that critical time 
was of vast importance to the country and can hardly be over- 
estimated. Their wealth, thus employed, was as much a na- 
tional blessing as is our present enormously increased wealth 
and prosperity, and it has never been sufficiently appreciated, 
any more than have the munificent endowments of public insti- 
tutions by our more modern and greater millionaires. 

When the large present day fortunes are released by the death 
of those who made them, there may be danger of too much of 
their money falling into the hands of profligate heirs who will 
recklessly abuse, instead of wisely using, their new-found 
wealth. Hence, provision should be made against its flagrant 
misuse under certain specified conditions and limits as to time, 
in any new Federal law that may be passed to tax inherited 
property on a graduated scale, as recommended by President 
Roosevelt. To him the country is primarily indebted for those 
investigations of long-standing corporate and other abuses 
which led to the passage of the new Federal laws governing 
corporations and certain industries and the enforcement of 



OUR NATIONAL PROGRESS 65 

which is now alone necessary to prevent similar abuses in the 
future. 

So rapid has been the growth of the country, however, and 
so grandly prosperous its condition, that the abuses discovered 
in railway management and in life insurance and other insti- 
tutions and industries have had no perceptible effect upon the 
nation as a whole. They have no more retarded its progress 
than they have lowered the general character of the people for 
integrity and good citizenship. Nor have they affected the 
crops. 

The crops, I need hardly say, are the backbone of our na- 
tional prosperity, for all wealth comes first out of the ground, 
and mining is infinitely subordinate to agriculture and farm 
products as a source of money power. For the last six years 
the farmers of this country have been reaping a well-earned, 
well-deserved harvest of profits, and this year bountiful nature 
has capped the climax of their prosperity by giving them, among 
other abundant crops, the largest corn crop ever harvested. 

The Government estimates the value of the farm products 
of the United States for this year — 1906 — at the enormous 
sum of $6,794,000,000 or $485,000,000 more than last year, 
notwithstanding a decline in the market prices of grain aggre- 
gating $40,000,000. 

Yet, great as is the value of our farm products, our manu- 
factures have so rapidly increased that they are now valued 
at more than twice as much. We are, for instance, at present 
producing pig iron at the rate of 26,000,000 tons a year, which 
exceeds the combined output of England, Germany and France, 
and it is estimated that our next year's output will exceed 28,- 
000,000 tons. 

Our textile industries, too, have developed so steadily that 
they are now third in national importance, and many cotton, 
woolen and other mills have already sold the whole of their 
product for 1907, and some have even cut into 1908. Looking 
at this splendid national prospect we may well say, Thank God 
for the rich abundance with which He has favored us ! Heaven 



66 PHENOMENAL PROSPERITY 

certainly smiles upon our glorious country and pours its bless- 
ings upon our enterprising people. 

This year has been full of surprises in phenomenal pros- 
perity. We produced 3,000,000,000 bushels of corn, 722,000- 
000 bushels of wheat and 12,500,000 bales of cotton. The 
United States Steel Corporation's net profits for the last quar- 
ter were $40,000,000. 

A man died in Anconia, 111., a short time ago at the age of 
nineteen who weighed 460 pounds and measured 73 inches 
around the waist, his herculean dimensions doubtless being due 
to his being born in the corn belt country. 

A dark lady in Texas recently gave birth to six little 
blackies. She probably had in mind the big corn crop and 
the enormous size of her State and its comparatively small 
population. The area of the State of Texas is 265,000 square 
miles. Divided into building lots 20x100, there would be 
enough to give every man, woman and child in the world a full 
lot and still leave one-half of the State for public parks and 
gardens. So the dark lady and her progeny have plenty of 
room. 

Can anyone possibly be surprised after this showing by any- 
thing that may happen next in such a country as this, with such 
a people, especially if we continue to be blessed and backed by 
Providence? Providence has, indeed, been kind to us. 

Just as true as is the Biblical saying that we cannot gather 
grapes from thorns nor figs from thistles, is the gospel of 
wealth that tells us that, so far from its being a fact that to 
have millionaires at one end of the scales means paupers at 
the other end, the very reverse is obviously true. All in the 
army or navy cannot be captains, generals or admirals, though 
all may hope ultimately to attain to such rank; so in business 
affairs all cannot be employers, but all can hope to be, and 
the history of our country has given ample evidence that nearly 
all our great leaders in affairs have risen from the ranks. 
Moreover, those in the ranks may be as well off as those higher 
up. 

In a country where the self-made millionaire exists there is 



FIFTY YEARS' DEVELOPMENT 67 

little excuse for pauperism. This is the result of either faults 
of character or physical incapacity. A comparison of the coun- 
tries of low wages, like China, Japan, Russia, Germany and 
France, where millionaires are few, with the United States, the 
country of highest wages, will show that millionaires can only 
grow amid general prosperity, and this very prosperity is, as 
I have shown, largely brought about by their energy and fore- 
sight. Their wealth is not made at the expense of the masses, 
but conduces to the welfare of the masses by the uses it is put to. 

In the vanished centuries power was attained by physical or, 
later, by military prowess — that is, the ability to outnumber, 
kill and impoverish others. He who commanded the most skill- 
ful fellow-murderers had the greatest power and compelled the 
greatest respect. To-day that man has the greatest power who 
achieves the greatest business success. He is the great general 
or captain of this great industrial and commercial age. 

I have now been in Wall Street active business life for over 
fifty years, and during that long period I have been one of the 
moderate factors at that financial centre, and thoroughly appre- 
ciative of all that has transpired there; and the development of 
material resources in this country and elsewhere, the scientific 
inventions and everything that goes to promote general ad- 
vancement, I do not hesitate to say, have been greater during 
that period than during all previous generations. No wonder 
that they have combined to make this the most advanced and 
powerful nation of the world. Like Patrick Henry, I have 
but one lamp to guide my feet, and that is the lamp of ex- 
perience. Judging by the past, it can be asserted with truth 
that with adequate laws in the hands of a patriotic and cour- 
ageous Executive (like Theodore Roosevelt), great individual 
and corporate wealth not only will not prove perilous to the 
public welfare, but will, even in a higher and more marked 
degree than in the past, encourage, uphold and magnify the 
noble and worthy institutions of this great republic. 

To further prove that all our working people have shared 
in the nation's immense prosperity — from the humblest worker 
up — it may be stated that about 3 per cent, of the total wealth 



68 EVERY MAN HAS A CHANCE 

of the country is on deposit in savings banks. In 1900 the 
sum was nearly $3,000,000,000, while now it is about $4,000,- 
000,000. This shows an increase of nearly 600 per cent, in 
thirty years. 

Blessed as our country has been with abundant general pros- 
perity, pessimism and the hounding of the rich and successful 
must seem to many, as it does to me, not only unappreciative 
and disrespectful, but unjust. 

Whoever examines into conditions cannot fail to observe, as 
statistics infallibly show, that there is every evidence of this 
country's phenomenal prosperity and development continuing 
indefinitely in the future, to the great profit, honor and glory 
of the American people. Gentlemen, we cannot all be multi- 
millionaires, but we all have in this bountiful country a better 
chance than in any other of becoming one. Do not despise 
the man who is more successful than you are or abuse him be- 
hind his back, but try to find out his methods, and if commenda- 
ble emulate them, and that may lead you to become at least a 
plain millionaire. Have faith in your God, hope for the best, 
and have charity for others, and all will be well with you. 



THE SITUATION IN WALL STREET AND THE 
NATION 

Address delivered at the Fifteenth Annual Convention of the Ken- 
tuckv Bankers' Association in The Auditorium, Louisville, Kentucky, 
September 18, 1907. 

AS all know, we have recently passed through a crisis 
of distrust in Wall Street — distrust of corporate 
credit, and railway and other corporate stocks. This 
was reflected in what I may call a slow panic, a heavy and 
prolonged decline on the Stock - Exchange under a continuous 
flood of liquidation both by investors and speculators. 

This crisis had been brewing for a long time, and we had a 
violent intimation of the dangerous and disturbing element in 
the financial situation last Spring, culminating in the collapse of 
the stock market in March. But it was not until a United 
States Court at Chicago inflicted a fine of $29,240,000 on the 
Standard Oil Company, of Indiana, that investors, and the large 
capitalists of Wall Street, including Standard Oilers, took 
alarm. Then the trouble became acute. 

The Wall Street speculative multi-millionaires in particular 
felt the shoe pinch very sharply. They had been trying hard 
to engineer a bull movement in stocks, for they were very 
heavily loaded with them. They had, however, met with in- 
different success, for the outside public was out of the market 
and refused to come in. This huge and unprecedented fine, 
the leaders of the bull movement saw, was a disconcerting and 
staggering blow at the property of corporations, and conse- 
quently at the stocks of corporations. It amounted, if en- 
forced, to confiscation, and they, as large speculators, like the 
rich and moderately rich investing class, reasoned that if the 
Standard Oil Company, of Indiana, could be fined and have 
69 



70 THE PANIC OF 1907 

its property confiscated in this way, other corporations would 
be liable to the same fate. They also saw that small investors 
and people generally, would think and argue as they them- 
selves did, and that their consequent distrust would lead to a 
heavy decline in prices under heavy liquidation, through fear 
or necessity. 

So they reversed their tactics. In other words they decided 
to run, and, being a little lame, they started early. Instead 
of continuing their bull movement in stocks, they at once with- 
drew their support from the market and began to liquidate 
themselves, for self-protection. The rank and file of the bulls 
seeing that stocks were going down with a rush, from this and 
other sources, were quick to do likewise, as if they thought the 
devil would take the hindmost, while the bears helped the mar- 
ket's descent by an unopposed and vigorous hammering. The 
bull leaders had abandoned it to its fate, and the banking in- 
terests were not willing to stand in the gap. 

The best and highest priced stocks suffered the heaviest de- 
cline, and for a fortnight there was an out-pouring of stocks and 
a down-pouring of prices that finally carried nearly all of these 
below the lowest of March. Wall Street trembled in its boots. 

The decline was accelerated by the unusual scarcity of money 
on time, and the advancing rates for it, which undermined con- 
fidence in the future of the money market, and in the ability 
of many corporations in urgent need of money to borrow on 
their collaterals, or obtain discounts. Fears on this score had 
very recently been justified by the failure of a large iron and 
construction company in New York City, and when it was fol- 
lowed by a receivership for the Pope Manufacturing Company, 
the rush to sell stocks, and the fresh break in prices, added to 
the previous demoralization. The bears held high carnival, for 
their harvest was abundant enough to realize their dreams of 
wealth. 

It was feared that this failure might prove the beginning 
of a long line of similar failures, and there were many gloomy 
forebodings as to what would come next, either in the way of 
failures, or State or Federal action against railway or industrial 



THE PANIC OF 1907 71 

corporations, which would, by damaging their credit, lower the 
value of their stocks, and possibly imperil future dividends. 
We too often fear the things we think instead of the things 
that are. 

Through all this turmoil and disorder the want of money by 
many large corporations and the difficulty of borrowing it was 
always an uppermost topic. It touched their weakest spot, and 
showed the insufficiency of their working capital. They had 
large assets in plant and materials, but comparatively little cash 
to carry on their large and increasing business. This made 
them dependent on the banks; and, when the decline in stocks 
and bonds caused distrust, that led to a curtailment, or refusal, 
of credits by the banks, they had nothing to fall back upon of 
their own. They were between the Devil and the deep sea. 

This want of a sufficiency of liquid assets is a common short- 
coming among our corporations, both large and small, and 
therefore a great element of weakness, especially in periods of 
distrust, and should be remedied as far as possible in the 
future. It is better to do less business on a safe basis than 
could be done by extensive borrowing, with the hazard of fail- 
ure in some unlooked for crisis or time of depression. The 
greed of gain should be tempered by the wise admonition to 
make haste slowly. But unfortunately most people are in a 
hurry and want to make short cuts to success. 

The August crisis, like all panics, was brought about and ag- 
gravated more by fears of impending trouble, and false rumors, 
than by actual occurrences. Sentiment often sways as much 
as facts, and the public had become extremely sensitive to un- 
favorable news and constructions regarding the situation, and 
comparatively blind and deaf to. its favorable features. All 
this was ammunition for the bears on the Stock Exchange, and 
they made the most of it by steadily and relentlessly hammering 
stocks down, so increasing the depression caused by the liquida- 
tion of both speculators and investors, and the loss of confi- 
dence in values. But, like Oliver Twist, the bears still asked 
for more. 

This want of confidence was mainly due to exaggerated ap- 



72 THE PANIC OF 1907 

prehensions of the effect upon railway and industrial corpora- 
tions and their stocks of the Government investigations and 
prosecutions, and the hasty action of the States against the 
railways in cutting down their rates. Much of this State leg- 
islation is too restrictive and will probably be modified, or 
rescinded, after a trial. 

It was argued that there was no telling where and when the 
so-called crusade against the railways and the Trusts would 
stop, or what the final result would be. The bears and the 
alarmists were equally loud and excited in pointing to the twen- 
ty-nine million fine as a sign of what, in varying degrees and 
amounts, might happen to other corporations, and bring ruin to 
many of them. Thus a merely unsettling influence was magni- 
fied into a formidable element of national disaster. As proph- 
ets of disaster the bears outdid each other regardless of their 
friends, the bulls. 

The threats and aggressive attitude of some of the Govern- 
ment's law officers alarmed many as much as their allegations 
against the corporations they prosecuted did, and they feared 
that irreparable harm to those corporations, and their business, 
would be done before their cases were finally decided on appeal, 
and that their stocks and bonds would suffer accordingly, with, 
it might be, interest and dividends suspended. Thus they bor- 
rowed a large amount of trouble. 

With these feelings uppermost in the public mind, or at least 
influencing investors, it was not surprising that such a fever of 
distrust prevailed on every stock exchange in the United States, 
and that sympathetically, and temporarily, it somewhat affected 
the London Stock Exchange and every bourse on the European 
Continent. The situation had begun to look almost hopeless 
before reason began to take the place of hysteria among most 
investors and speculators. Then the indiscriminate slaughter 
of stocks prompted investment buying, and the great scare, after 
two weeks of storm and stress, gradually passed into history, 
while prices, with occasional setbacks, responded to the change 
of sentiment by slow but general recovery. But whether this 
will be followed by a relapse or not, remains to be seen. 



THE REMEDY FOR REBATING 73 

The apprehension excited among investors and speculators 
in stocks by that $29,240,000 fine against the Standard Oil 
Company, of Indiana, did an immense amount of harm through 
the enormous losses to which it led. In combination with the 
prosecution of the Southern Railway by Southern States, in- 
volving the conflict between North Carolina and Alabama and 
the United States Courts, that extravagant fine, so suggestive 
of opera bouffe, was the immediate cause of the heavy liquida- 
tion that produced this August crisis and turned the New York 
stock market into a storm center. Although there was no prob- 
ability or even possibility of this fine ever being collected from 
a million dollar corporation, even if affirmed on appeal, public 
sentiment was about as much disturbed as if it were ultimately 
collectible. By creating, although without sufficient reason, fear 
of confiscation it led to those enormous sales and sacrifices 
of stocks by investors, as well as by speculators, and the virtual 
panic that lasted those two long and memorable weeks. 

The innocent thus suffered with the guilty, and the evil 
effect of such a fine was clearly demonstrated by a very severe 
and disastrous object lesson. The true remedy for rebating 
and other wilful violations of law is not to be found in the 
infliction of heavy penalties on the guilty corporations but on 
the responsible and guilty officers of those corporations, and 
not alone by fine but by imprisonment. Heavy fines inflicted 
on corporations fall finally on their stockholders, through a 
corresponding loss of dividend paying power, and the lowering 
of market prices for their stocks. The proper remedy is pun- 
ishment behind iron bars. 

As the stockholders are in no way responsible for delinquen- 
cies in management, it is unjust to make them suffer the con- 
sequences of these. It should, therefore, be the future policy 
of both the Federal Government and the States to punish cor- 
porations for illegal practices by criminal proceedings against 
those in their employ who are found to be responsible for them. 
Thus punishment will be confined to the guilty, and confidence 
will be restored among investors, for such prosecutions would 
in no way tend to depreciate the value of the stocks and bonds 



74 THE PANIC OF 1907 

of the corporations concerned, but on the contrary they would 
tend to enhance their value by promoting honest management. 
This is a pivotal point to be kept constantly in view. Backslid- 
ers would be the only sufferers. 

The collapse in Wall Street stocks was, however, not so much 
due to the trust prosecutions, the Southern States Railway legis- 
lation, the twenty-nine million fine, and the avowed policy of 
President Roosevelt's administration, as to the general condi- 
tion of monetary affairs, and the condition of the stock market 
itself, although the causes enumerated started the August col- 
lapse. The outside public had for a long time been holding 
aloof from the stock market, owing both to the railway and 
industrial prosecutions, and hostile State Legislation^ and the 
great activity in trade, and in land, mining and other specula- 
tion calling for a great deal of money. Speculation outside of 
Wall Street was never more rampant. 

At the same time stocks were very largely concentrated in 
the hands of a few men of great wealth, who were anxious to 
sell them at improving prices, and they could only do this by 
making a market for them. They had in this endeavor a hard 
row to hoe, as the farmers say, for money was scarce and 
dear, on time, not only here but all over the world, with the 
European market like our own, overloaded with securities for 
sale, and", worse than all, with no demand for them from in- 
vestors. They were in a tight place, rich as they were. 

This condition of affairs was reflected in the gradual and 
persistent decline of British Consols that had always been 
rated as the best and safest securities in the world, to 81, 
the lowest price at which they had sold since 1848 — the year 
of the Smith O'Brien uprising in Ireland, when they touched 
80. The depression in the other European stock markets was 
almost equally great, particularly in Berlin. We could, there- 
fore, look for no market for our stocks, or our vast accumula- 
tions of new railway and other bonds, in Europe. The foreign 
markets were closed to us, and wanted nothing American but 
our gold. Our speculative capitalists loaded down with these 
unsalable securities were severely handicapped. From being 



OVER-EXTENSION OF CREDIT 75 

giants they had become cripples. Their wealth was tied up 
instead of being in the liquid form of poorer men who had their 
money in savings banks, withdrawable at any time. One New 
York City institution, the Bowery Savings Bank, held and still 
holds over a hundred million dollars of deposits. 

Here was wealth in a liquid form that our large Wall Street 
capitalists, like most of the large corporations, sadly lacked, 
and they well might have envied their poorer brethren who 
owned these deposits. In proportion to their means the poorer 
men were better off than the rich. 

The fact is that our rich men undertook too much, both in 
the forming of syndicates to underwrite new bond issues and 
in attempting to control the stock market under adverse circum- 
stances. They over-estimated themselves very largely, or, in 
slang parlance, bit off more than they could chew, and when 
the shoe pinched most severely in March and again in August 
last they had to sell stocks at a heavy sacrifice to pay off the 
loans that were called in by the banks, or to meet the calls for 
more margin. For once they were really hard up. 

This over-extension of Wall Street capitalists, with their ef- 
forts to unduly inflate prices, had its counterpart elsewhere, for 
such over-trading was by no means confined to them but ex- 
tended to, and was conspicuously shown by railway and indus- 
trial corporations in their efforts to keep up with the increasing 
demands upon them consequent on the country's great prosper- 
ity and natural growth. This over-extension was in the form 
of excessive expenditures and vast issues of bonds, stocks and 
short-time notes. These far exceeded in aggregate amount the 
capacity of our own investors to absorb. Hence, hundreds of 
millions of these are still being carried by the banking syndi- 
cates that underwrote them, and of course, they at present show 
a very heavy aggregate loss. This kind of medicine is much 
disliked even by multi-millionaires. 

Stimulated by the country's enormous prosperity during the 
last few years, we have gone ahead too fast in all kinds of new 
and costly construction work and improvements. We have, in 
fact, gone ahead regardless of expense; and railway and manu- 



76 THE PANIC OF 1907 

facturing corporations have stretched their credit, in too many 
instances, almost to the breaking point. Meanwhile the rail- 
ways have been overtaxed with traffic and the manufacturies 
over-run with orders for their product, and they still are so 
notwithstanding all the much discussed and confidently pre- 
dicted falling off in trade. 

Through over-taxing their capacity, their working capital and 
their credit, to keep up with it, the National prosperity has 
proved a two-edged sword to many corporations as well as in- 
dividual firms, and the greed for excessive profits among them 
led to much of the corporate dishonesty, illegal acts and meth- 
ods, and wholesale graft in high places, which we have seen 
exposed. These excesses and irregularities are now being cor- 
rected. 

No wonder that their exposure, from time to time, gave blow 
after blow to public confidence, and kept investors from buying 
stocks, and turned their attention and speculative enterprise in 
other directions, and into other channels. These exposures 
and violations of law naturally aroused severe public criticism 
and indignation, and called for investigation by the Federal 
Government. In this President Roosevelt took the lead for the 
purpose of correcting the mal-administration, the abuse of 
power and the illegal practices that had been exposed. 

It was far from his intention to disturb public confidence 
among the stockholders of the railway and other corporations 
that, through their officers, had been guilty of illegal and 
fraudulent acts, particularly rebating. His object was by ex- 
tirpating abuses to secure honest and lawful methods of man- 
agement, and so protect and benefit investors in bonds and 
stocks, and secure justice and equality for shippers of produce 
and merchandise of all kinds, with the same rates for all, small 
and great, rich and poor, without special privileges to any, 
great corporations being compelled to respect the law as well 
as small ones. The righting and correction of wrongs prac- 
ticed in violation of the Interstate and anti-trust laws of Con- 
gress would have had no disturbing effect upon investors, and 



ROOSEVELT NOT RESPONSIBLE 77 

the public mind, if properly viewed; and it requires a stretch 
of imagination to hold Mr. Roosevelt even indirectly responsi- 
ble for the twenty-nine million fine, the immediate cause of the 
disturbance in Wall Street that followed its infliction. 

Under the general monetary and other conditions then exist- 
ing that fine proved to be the last straw that broke the camel's 
back, and, as is too often the case, the innocent stockholders 
were made to suffer with the guilty in the collapse of the stock 
market. The judge who frightened investors with visions of 
confiscation, by inflicting that preposterous fine, must bear the 
responsibility of starting that downfall, not President Roose- 
velt. 

While stocks were going down rapidly, cotton advanced, thus 
showing that cotton is still king in the South, although less 
powerful in its sway than before the war, owing to the South's 
development of its other resources and its more diversified 
financial and commercial interests. It is fortunate in not hav- 
ing all its eggs in one basket. 

The recuperative power shown by Wall Street, after the 
crisis, was typical of that of the whole country. Speculative 
sentiment quickly passes from or\e extreme to the other. We 
are a great and progressive people and soon recover from dis- 
asters however formidable. We had a conspicuous illustration 
of this in the San Francisco catastrophe, to say nothing of the 
civil war. But a period of stability and comparative quiet 
would now be salutary. The recovery in the stock market, not- 
withstanding the severity of the recent strain, was mainly due 
to the sober second thought of the people, in conjunction with 
the announcement of the plan of the Secretary of the Treasury 
to ease the money market by making deposits weekly in the 
National banks of the large cities until the middle of October. 
This allayed anxiety as to the money market and it will, or may, 
have the desired effect in a large degree until the crop moving 
season is over, by preventing the undue locking up of money 
in the Sub-Treasuries at a time when it is most imperatively 
needed for business uses. The better feeling resulted, early 



78 THE PANIC OF 1907 

in September, in the 40 millions of New York City 4>y 2 per 
cent, bonds being bid for five times over, although at only a 
moderate premium. 

The Treasury plan is only a makeshift, however. The true 
remedy for this currency evil lies in the abolition of the Sub- 
Treasury system, and the substitution in its place of now exist- 
ing National bank depositaries. Congress should abolish it 
accordingly, and it probably will if the banks unite in demand- 
ing it, and so keep the currency in the banks, and in active 
circulation. The present antiquated system has been outgrown 
by the country, and is a reproach to our national intelligence 
as a great commercial people. 

Meanwhile, because of what the government had done to cor- 
rect abuses in the management of the railways and the trusts, 
their stockholders will find that it has added to the security 
of their holdings of railway and other stocks, at the same time 
that it will prevent the acquisition of large fortunes, in dis- 
honest ways, at their expense. The business situation will also 
be the safer and sounder, and more conservative for it, and its 
general betterment will compensate for the suffering involved 
in the ordeal we have passed through. Often out of evil there 
cometh good. 

All concerned in the ownership and management of corpora- 
tions should willingly conform to the Federal laws now in 
force, and if any of these should prove onerous, unjust or de- 
fective, Congress can be called upon to amend them. They 
might as well make a virtue of necessity. The same course 
should be pursued with regard to railway rates, fixed by the 
respective States, until these, and their justice or injustice, 
have been passed upon by the Supreme Court of the United 
States. Through this compliance with law the popular craze 
against the railways and the Trusts will gradually subside, 
while the misconceptions, and exaggerated views concerning 
Mr. Roosevelt's policy and. its influence, will die out in the 
clearer light of a better understanding. 

Of one thing we may be sure, and that is, that President 
Roosevelt will always stand firm in his policy of enforcing the 



CORPORATION REGULATION 79 

law against wrongdoing by corporations. We heard this from 
Secretary Taft in his strong endorsement of that policy, and 
we heard it re-affirmed in the President's Provincetown speech. 
But the penalties should always be inflicted on the individual 
officers responsible for violations of law, and these to be ef- 
fectual, should involve imprisonment, not fines against them or 
the corporations. That remedy is the only certain cure for 
the disease, if it again appears. But uniting in support of the 
President's policy, which simply means, the enforcement of the 
Interstate Commerce law and the Sherman Anti-Trust law, 
as amended, those in control of railways and industrial cor- 
porations will increase the value of their stocks, and raise their 
credit both at home and abroad, while inspiring the other of- 
ficers, and the rank and file of their employees, with a higher 
sense of honor, and responsibility to the public, than was com- 
patible with the old rebating and graft-seeking trickery. 

A large part of Wall Street was in such a nervous state dur- 
ing the crisis that it jumped at shadows, and trembled at a; 
touch. It shuddered when Attorney General Bonaparte face- 
tiously said that there was a fine covey of game among the 
large capitalists in control of corporations and that he would 
be a poor markman who would not bring some of the birds 
down. 

It found fresh cause for alarm in the fight between the 
Southern Railway and the Southern States, and when the Rail- 
way had its license canceled by Alabama it had a fresh attack 
of " nerves," and, later, saw an ominous event in the surrender 
of the railway to the State, to recover its license. It feared 
the anti-corporation storm would wreck and devastate the busi- 
ness of the country. But after a storm there cometh a calm, 
and the nation, as a whole, is unscathed. 

In considering the situation we must never fail to bear in 
mind that although investors, and holders of stocks and bonds, 
and many of the weaklings of the business community, have 
been made to suffer severely by the stern and uncompromising 
course of the Federal Government and some of the States, — 
and that confidence was so undermined as to cause a temporary 



80 THE PANIC OF 1907 

halt in enterprise, — good results will follow. This ordeal has 
been at least a purifying one, and while the East has exag- 
gerated its disturbing influence the West and South have been 
comparatively indifferent to it. Those sections were never 
more prosperous and progressive than they are now. This 
arises from the fact that the East, being richer than the West, 
and having much more invested capital, especially in stocks and 
bonds, is correspondingly more interested in the market for 
these than the West, and more disturbed by great depression 
in Wall Street, and the causes producing it. The East is, 
therefore, much more likely to borrow trouble, than the West 
or the South, especially when it cannot borrow money. 

This borrowing of trouble took the usual form of fearing 
from day to day that worse consequences of the crisis awaited 
us than we had yet experienced, and it was increased among 
business men and corporations when they found their banks 
would no longer accept as collaterals for loans and discounts 
many of the securities they held for investment, and upon which 
they had been previously able to borrow in proportion to their 
market price. They found, too, they were generally unable 
even to borrow, on time, the money they wanted on the best of 
collateral. 

They were therefore cramped for money, and this restricted, 
or embarrassed them, in their business, and, in a few instances, 
caused their failure. Here we recognize the close connection 
that exists between trade and finance. The severe depression 
on the Stock Exchange so far impaired the market value of 
stocks and bonds, as to make the banks and other money 
lenders distrustful in granting credits, the result being this in- 
ability to borrow, or at least to borrow all that was necessary. 
So it was not surprising that those with insufficient working 
capital were badly cramped, and had to curtail their business 
and make sacrifices, or go to the wall. 

The curtailment from this cause among mercantile and man- 
ufacturing firms has been very extensive. It was better than 
going to the wall, however, and the after effect upon the busi- 
ness situation has been salutary and wholesome, It has acted 



CURTAILMENT OF LOANS 81 

like a safety valve in checking over-trading, over-capitalizing, 
over-borrowing, over-stocking, and over-doing generally. It has 
slackened the pace at which too many scantily equipped con- 
cerns were going on the road to ruin. So it has made the 
business situation stronger and safer for the sound and solvent; 
and the elimination of a mushroom growth of irresponsible 
credit-seekers should be welcomed by the banks. 

Wall Street is the great monetary clearing house of the coun- 
try whose ramifications are co-extensive with the nation itself. 
It does not create values, but it reflects everything affecting 
securities, and commodities, and represents all material inter- 
ests. It is an unfailing barometer of values and the times. 
So those who say a heavy fall, or a panic, in stocks only affects 
Wall Street speculators shoot very wide of the mark. Wall 
street, or I should say New York, radiates its influence over the 
whole country, and to a large and growing extent over the 
whole world, and is destined, within no very long time, to be- 
come the financial centre of the world. The recent severe 
financial disturbance in Wall Street resulting in a reduction 
in the value of securities aggregating over $3,000,000,000 has 
proven one important thing, and that is, that a panic in Wall 
Street does not produce that immediate and severe disturbance 
to industrial interests which it once did — a striking proof of 
the strength of the country. Nevertheless it is absurd to pre- 
tend that liquidation and panic such as Wall Street has ex- 
perienced do not discount a business recession. 

No doubt some of the Trusts and railway companies, accus- 
tomed to driving with a too free hand, and without much regard 
for the law, considered they were being handled very harshly 
by the law officers of the Government, when they were brought 
up with a round turn, and heavily fined for rebating. But, 
as they had violated the law wilfully, they had only themselves 
to blame, and they well knew that the way of the transgressor 
is hard — when convicted. There was some reason, however, 
in the complaint of some of the railways that in many of the 
States they had been made the targets of an aggressive popu- 
lar policy towards corporations, that is, the policy of enforcing 



82 THE PANIC OF 1907 

vigorously laws which might in some cases, such as the passen- 
ger and commodity rate laws by the States, finally be declared 
unconstitutional by the Supreme Court of the United States. 

Our large railway and industrial corporations were primarily 
responsible for the disturbance and loss of confidence in the 
monetary situation through their recklessly extravagant issues 
of bonds, stocks and short term notes. For a long time they 
seemed to be doing their best to kill, in this way, the goose that 
laid the golden egg, and they finally succeeded in exhausting 
both their own borrowing power and the ability of the banks 
to lend, or of investors, at home or abroad, to purchase their 
issues. This tremendous output of new securities had to be 
checked, for it not only glutted the market, and over-loaded 
underwriting syndicates, but depreciated values and created dis- 
trust among investors. It was piling Ossa on Peiion with a 
vengeance. 

The collapse of last March in the stock market, and the more 
prolonged one of August were obviously outbreaks of the same 
malady, the latter intensified by that twenty-nine million fine. 
The distrust that caused these explosions had been brewing 
for years, and had its origin in the wholesale issues that over- 
taxed the money market, and the lending capacity of the coun- 
try, and also squeezed Europe, like an orange, for all the money 
it had to lend. 

It was righteous retribution that overtook some, at least, of 
the wrong-doers among the larger corporations. Their chickens 
had come home to roost through their own unrestricted and ex- 
travagant exploitations and illegal and dishonest practices. 

The wholesome remedy of their discontinuance, combined 
with proper curtailment and conservatism, has been forced 
upon them by the necessities of the situation; and the enforce- 
ment of the new laws has no doubt put a stop to at least the 
most flagrant of the corporate abuses before prevalent. But 
the too sudden application of the brake at a critical turn in 
the road may at any time work havoc ; and it is doubtful whether 
rigorous prosecutions for violations of law in years gone by are 
not productive of more harm than good. They are always 



THE SMALL INVESTOR 83 

unsettling, and unsettlement involves a corresponding weaken- 
ing of confidence. 

But future offences should be prosecuted with the utmost 
rigor of the law and the railway companies and industrial cor- 
porations now fully understand this ; and not one of them would 
be likely to run the risk of again violating the law, especially 
with imprisonment, for offenders, as the penalty. We must, 
however, always be careful not to make the remedy worse than 
the disease. In other words the interests of the country at 
large are of more importance than the punishment of corporate 
wrong-doers for long past offences. Some allowance must be 
made for the heat of competition in the strenuous years we have 
passed through, and the former general tendency to moral 
laxity of men controlling and representing corporations, when 
acting in their corporate capacity, a laxity they would probably 
not have been guilty of in their own personal affairs. This 
would, of course, indicate their want of a proper sense of re- 
sponsibility and honor. But that failing is not uncommon. 
Now their eyes have been opened to the danger of being with- 
out it. 

The apparent indifference of some of the principal prose- 
cuting officers of the Government to investment interests, in 
the published interviews with them, was, however, complained 
of as of itself disturbing and disconcerting to investors. It 
may have indicated a supposition that only capitalists, specula- 
tors and those of large means were affected by the decline in 
stocks and bonds. The erroneousness of this impression is 
shown by the stock transfer books of every large railway and 
industrial corporation, in which the small holders, of small 
means, are very numerous, running up to several or many 
thousands in each corporation and reaching a very large aggre- 
gate of shares. The small investors thus suffer by deprecia- 
tion with the large ones, and even the people of small means 
with only Savings bank deposits are, as we can all see, menaced, 
through their dividends, by the depreciation of the securities 
held for investment by the Savings banks. Their depositors 
may learn a lesson in finance from this. 



84 THE PANIC OF 1907 

The Savings banks of the State of New York report for the 
half year, ending on June 30, 1907, a new high aggregate for de- 
posits and resources, the deposits being $1,394,296,034 and the 
resources $1,490,760,675. Yet their surplus, calculated on the 
market value of their holdings of stocks and bonds, had fallen 
from $108,671,735 on June 30, 1906, to $95,743,206. Here 
we have a shrinkage through the decline in prices of nearly 
thirteen millions, or twelve per cent, of their surplus, in one 
year, although the Savings banks are by law restricted in their 
investments to the most stable of first class securities. If we 
go back to their reports of January 1, 1901, we find their 
surplus was $118,294,674, showing that the market for bonds 
has meanwhile been on a declining scale. Thus the Savings 
banks and Wall Street are shown to be related. > 

In this August crisis there was far too much hysteria shown, 
where calm judgment was called for, and this hysteria made 
the situation dangerous, although there was nothing dangerous 
in the actual condition of the country, apart from the distrust 
of credits and the scarcity of money on time, resulting from 
the immense activity of general business here and the monetary 
stringency abroad. A moderate slowing down of business is 
consequently the best remedy for this excess, and the one that 
will in the most direct and natural way generally restore ease 
to the money market. Meanwhile the banks should assist within 
proper limits, when called upon by corporations and firms, of 
proved earning capacity and known to be sound, and discrim- 
inate against those that have only an insecure or speculative 
foundation. This would accord with the teaching of the Bible, 
" To him that hath shall be given and from him that hath not 
shall be taken away even that which he hath." 

The popular feeling against very rich men, who have ac- 
quired their wealth through the trusts and railways, is not a 
prejudice against property, but against the supposed ways and 
means by which their large fortunes were acquired. The im- 
pression is with many that those means were dishonest, and 
that their rapacious grasping for riches involved corruption in 
corporate management, and, in general a feathering of their 



ROOSEVELT DEFENDED 85 

own nests at the expense of the people, or at best other people. 
To see them flaunting what they consider their ill-gotten gains 
exasperates men and spreads discontent and unrest among the 
millions. Envy and malice are easily cultivated. 

It is an inequality of wealth that they resent because they 
believe it to have been created by rebating, stock watering, in- 
side speculation, and tricks and devices by which they got other 
people's money unjustly, and various illegal and fraudulent 
practices and abuse of corporate power. The exposures made 
from time to time tended to confirm the people in this impres- 
sion and prejudice, and President Roosevelt was only re- 
sponding to their call when he urged the prosecution of the 
corporations known to have been among the most flagrant 
violators of the anti-rebate law. 

These violators were not the corporations, which we all know 
have no souls, but their officers, yet the officers have gone thus far 
unwhipped of justice, much to the disgust of the masses of the 
people. But in future this defect should be remedied, and rich 
and poor among the individual violators of the law should be 
prosecuted criminally, and upon conviction sent to jail like 
any other criminals. I can understand how many men, who 
as private individuals would have avoided criminal or wrongful 
acts, had no scruples about violating laws in their corporate 
capacity. This, however, is an indefensible plea. They 
showed a moral laxity which has been exposed and branded as 
a crime, and instead of it let us hope they have now a sense 
of corporate responsibility and honesty, as a result of these 
Government prosecutions, and the knowledge that in future 
such violations of law can hardly be repeated with impunity. 
They will certainly find that honesty is the best policy. 

The cry against Mr. Roosevelt has been so indiscriminate 
that it would often be amusing but for its serious aspect. If 
a corporation, firm or individual fails in business nowadays Mr. 
Roosevelt is blamed. If a man makes a bad investment in 
anything, or if his creditors press him for payment, or his 
creditors are slow to pay, or go into bankruptcy, he blames 
Mr. Roosevelt, while the vast host of large and small investors 



86 THE PANIC OF 1907 

in stocks and bonds all over the country are almost of one 
mind in blaming Mr. Roosevelt for the depreciation in the 
market value of their stocks and bonds. 

I should not be surprised if very soon even the ladies who 
have lost at the fashionable game of bridge will blame Mr. 
Roosevelt for their losses. Everyone, nowadays dumps his mis- 
fortunes upon Roosevelt and attributes the cause to him. I 
recently heard of a man who had been doing a thriving business 
on Long Island shore catching eels and selling them in the 
New York market. Lately the eels have stopped going into 
his pots to be caught, so he is now going about howling against 
Roosevelt for ruining his business. That is no more ridiculous 
than many other things for which he is blamed without having 
had anything to do with them. In thus complaining they 
overlook the long train of causes and events that led up to this 
year's disturbances in Wall Street. 

The public must have a scapegoat in times of excitement and 
discontent, and many of our wealthy people thoughtlessly held 
the President responsible for the disturbances and unsettlement 
we have witnessed, and their own losses and disappointments, 
because he had taken the initiative in calling upon the law 
officers of the Government to prosecute the railway and indus- 
trial corporations known to have violated the law. They seemed 
unaware that he did this to stop those illegal practices, which 
had made enormous fortunes for the favored few and enabled 
them to crush or impoverish their competitors and impose upon 
the people. He was the people's champion. 

He did not advise these prosecutions without good cause, for 
in every instance where a case was tried, on its merits, the Gov- 
ernment secured a conviction. Fines of large but not enormous 
amounts were levied accordingly against many of our principal 
railway companies, including the New York Central, and against 
large industrial corporations, including the Sugar Trust, for 
rebating and accepting rebates. But as the punishment was 
always administered by fining the corporations, and never by the 
imprisonment of the officers who were the actual violators of the 
law, the masses of the people complained that while they them- 



CAUSES OF THE PANIC 87 

selves would have been sent to jail, if guilty of criminal of- 
fenses, these high and mighty railway and trust officials were 
not, and that by fining the corporations, only the innocent 
stockholders were made to suffer instead of the individual 
wrong-doers. Their complaint was just. 

I trace the causes of this year's state of affairs as far back 
as the failure in London of Baring Bros. & Co., in 1890, for 
that unexpected event gave a shock to confidence, and curtailed 
credits, all over the world. Indeed, the long career and prestige 
of that celebrated and honorable house gave it a credit in both 
hemispheres that was second only to that of the Bank of Eng- 
land, and its collapse wiped out of existence the immense 
amount of credit, and the banking facilities that it had enjoyed, 
so long. This involved a corresponding international contrac- 
tion of the medium of exchange, and tightened the purse 
strings of the world, and it continued to do so long after the 
failure had passed into history. 

The Boer war involved, in another way, great and prolonged 
depression in England. It drained her of an immense amount 
of money, and drained her also of a vast number of men whose 
labor was needed at home. To raise the sinews of war, she 
had to issue from time to time large amounts of Consols, and 
these, being in excess of the power of investors to absorb, stead- 
ily declined, and now — years after the war — they are still 
heavy. It naturally surprised the world when last month they 
reached 81, the lowest point in their long decline, and John 
Bull was sorely puzzled to define the cause. 

The Russian-Japanese war was another very costly and de- 
pressing factor, and adversely affected international money mar- 
kets because it involved immense borrowing by both Russia and 
Japan, and their bonds are still helping to glut the European 
markets, and to some extent our own, as many of the Japanese 
bonds are held here. At the same time France is particularly 
unfortunate in being burdened with a vast amount of Russian 
securities, far more than ever before, which leaves her cor- 
respondingly powerless to make other investments, or extend 
assistance, when needed, to other countries. 



88 THE PANIC OF 1907 

Then came our Pacific coast disaster, the earthquake and fire 
at San Francisco, which involved enormous losses there, and 
struck Wall Street and its speculative capitalists a tremendous 
blow, for the latter were about as heavily loaded with stocks at 
the time as before the March crash, and these had a severe break 
in consequence. It also involved English and German as well 
as American fire insurance companies in heavy losses. 

The effect of these disastrous events, both here and in Eu- 
rope, has been more or less cumulative, and their influence was 
so great and far-reaching that it is still being felt, especially by 
our rich and speculative Wall Street men, who have little of their 
wealth in the liquid form they would prefer, notwithstanding 
their heavy liquidation. They are still tied up with large 
amounts of stocks and bonds, bought long ago at higher prices, 
and for which there is but a limited market. As the same 
condition of affairs exists in Europe, they may find some com- 
fort in that fact, for we are told that misery loves company. 

Fortunately, the reports of the National and State banks all 
over the country show that they are in a sound and strong con- 
dition, the result of proper conservatism, and in protecting 
themselves they have protected their depositors and stock- 
holders. So the banks have escaped being involved in serious 
losses through the crisis in the stock market, and are in a posi- 
tion, now that the depression is at least no longer so acute, to 
lend assistance in the recovery that sooner or later inevitably 
follows such a cyclone and excessive decline in prices as we have 
witnessed. 

The banks, however, have, in common with all other holders 
of stocks and bonds, suffered loss by the depression of prices of 
the securities owned by themselves, this being, as I have shown, 
particularly the case with the Savings banks, and it may pos- 
sibly, if not soon recovered, lead to a reduction of their divi- 
dends. If it should so eventuate it would be an object lesson 
that would show the poor man that even his Savings bank de- 
posit was not beyond the depressing influence of a Wall Street 
crisis. But let us hope that there will be no such far-reaching 
result. The Savings banks have, however, already deducted 



RAILWAY EXTENSION 89 

large amounts from the value of their holdings of securities on 
account of the past and present year's depreciation. Few of 
their depositors understand this, and where ignorance is bliss 
'tis folly to be wise. 

We are fortunate in being Americans and having so great a 
country under our sovereignty, for its vast geographical extent, 
its diversified interests and resources, and wide differences in 
climate, make one section to a certain extent independent of 
another. Thus the South, the West and the Northwest looked 
with complacency upon the Wall Street crisis as something 
confined to the East. There was no falling off in bank clear- 
ings, no lessening of the activity in trade South or West. The 
industrial and agricultural resources of the country were un- 
affected; and the outlook for the crops and trade is reassuring 
in all directions. Yet last month many feared the country was 
going to the dogs. 

The last Government report indicates a decrease in the esti- 
mated crop of wheat, but with the invisible left-over supplies, 
it will fall little, if any, short of last year's crop, while the 
corn and other grain crops will largely exceed the demand for 
home consumption. The cotton crop, too, which the planters 
will soon begin to gather promises to be almost equal to the 
last. Yet its price is much higher. The grain crops, by rea- 
son of damage to the crops in Europe and elsewhere, and higher 
prices, are likely to yield more when marketed here and abroad, 
than in recent years. Our exports of cotton, too, in the last 
fiscal year were valued at more than half a billion of dollars, 
while our exports of manufactures aggregated 750 millions. 
Our coal, iron, copper, gold, silver and other mineral products 
will be larger in 1907 than in 1906, and our total industrial 
income will show no diminution. Yet in August many felt as 
blue as indigo about the situation. 

I say all this is to show that the railways will have all the 
freight traffic they want, and the enforcement of existing laws 
relating to them will be more likely to increase than diminish 
their net earnings, for they will gain largely by the stoppage 
of rebating and other abuses. Some of our State and possibly 



90 THE PRESENT SITUATION 

some of our Federal laws may be too drastic, and, so far as 
their requirements are unreasonable, oppressive or unnecessary, 
they should, and doubtless will be, amended by Congress and 
the States, or set aside as unconstitutional by the courts, as in 
the case of Pennsylvania's two cents a mile rate, for an unjust 
or vexatious law is abhorrent to justice, — justice so well typi- 
fied by that blind goddess who holds the scales on such an even 
balance in the world of art. Corporations, as much as indi- 
viduals, are entitled to a square deal, and a square deal for all 
is what President Roosevelt is working for. 

As it is, most of the Western railways have, like the South- 
ern lines, a double track traffic for a single track road, 
and there is abiding prosperity in this plethora of business. It 
is a sort of embarrassment of riches, for, notwithstanding the 
vast additions that all the railways have made to their rolling 
stock and motive power, in recent years, and the enormous 
amounts spent in building branches and double tracking por- 
tions of their main lines, and increasing their terminal facilities, 
they are still unable to expeditiously cope with the present 
superabundance of traffic; and this will naturally increase with 
the growth of population. So the outlook for their stockhold- 
ers is better than ever. 

For his courageous course in unearthing and prosecuting the 
rebating evil and other wrongdoing, President Roosevelt is en- 
titled to the highest praise, and I reiterate that the heads of 
railway and other large corporations will best serve their own 
and the country's interests by co-operating with him and his 
administration to secure strict compliance with the law in fu- 
ture, with the hope of clemency for their past violations of law. 

That the railway companies always, as a matter of policy, 
are disposed to be conciliatory and not willing to be openly 
antagonistic to the enforcement of law, is beyond question. 
Like the American people, they are law-abiding. We saw an 
instance of this in the course of the Southern Railway and 
other Southern lines, in withdrawing their appeal from the State 
Court to the United States District Court in the rate case, and 
agreeing to charge only the State rates, namely two and one- 



SOCIALISTIC UNREST 91 

quarter cents a mile, in North Carolina; two and one-half cents 
in Alabama and three cents in Virginia, till a decision on the 
constitutionality of the State rate laws is rendered by the United 
States Supreme Court. This concession was avowedly made 
to avoid further conflict with those States, although the com- 
panies were within their legal rights in the appeal they had 
taken. They were wise. 

After the good work the Government has already done in ex- 
posing and punishing the rebate evil and other abuses, it would 
seem that the end in view, namely, their stoppage, has been 
substantially achieved. I therefore think you will agree with 
me that the Government can well afford to rest on its secured 
results and its laurels, and discontinue prosecutions for old of- 
fenses, while holding all to the strictest accountability for vio- 
lations of law in the future. The law-breaking corporations 
have been taught a lesson that they will never forget, and 
have suffered penalties that they will not be willing to incur 
again. 

By the Government thus showing clemency towards the of- 
fenders they would all the more be put on their good behavior, 
and the clamor against Mr. Roosevelt, in which they have been 
the leaders, would gradually subside. Those who have been 
punished by the law are always very likely to have a bad opin- 
ion of it, and to retaliate by charging injustice. Hence the old 
English saying, " No rogue e'er felt the halter draw with good 
opinion of the law." 

This reminds me that the two International Congresses of 
Socialists held in England and Germany in August, one at Cam- 
bridge, and the other at Stuttgart, showed what large masses 
of the people there are laboring to overthrow the existing law 
and order of society by putting restrictions and fetters upon 
individual achievement, genius and capacity for good work, and 
giving the inferior masses all that they would allow the su- 
perior and educated to enjoy, a levelling process entirely in- 
consistent with Americanism, for it would destroy all incentive 
to great efforts, and reduce all to a uniformity inimical to 
progress. Some of the decline in British Consols is attributed 



92 SOCIALISTIC UNREST 

to this Socialist agitation in England, and notably in the House 
of Commons, several of its members being radical Socialists; 
and the same is true of Germany and its Parliament. 

In Berlin, which has been for some time the storm-centre of 
Europe, Socialism and its revolutionary doctrines, and especially 
the meetings and preachings of the more rampant of the Social- 
ists, have added to the disturbance, distrust and depression 
caused by the monetary situation. There, as here, over-expan- 
sion in all directions had over-taxed the money market, and 
glutted the Bourse, the banks and the speculative capitalists 
with new issues of securities that were either unsalable, or sal- 
able only at a ruinous sacrifice, owing to the heavy shrinkage in 
prices, and the absence of demand at the low prices. This 
presents an almost parallel case to our own, except as to the 
effect of socialistic agitation. 

We have too many blatant Socialists here, but they are not 
planted in congenial soil, and their demagogery and schemes 
for the destruction of society as it exists, will yield no harvest, 
for in this great country, where all are free, and blessed with 
equal opportunities, there is no reason, no just cause, or excuse, 
for Socialism. The agitation in favor of Socialism, and its doc- 
trines, is not American. It is antagonistic to American institu- 
tions, and comes almost entirely from those who have fled from 
oppression and despotism in Russia, and elsewhere in the Old 
World, to our shores, and who fail to see, as they should, that 
the conditions which have given rise to Socialism in Europe do 
not exist here. So Socialism will never take root in the United 
States, however much it may be agitated by those of foreign 
birth who reciprocate our hospitality in giving them all the 
rights of citizenship that we ourselves possess, by advocating 
the downfall and destruction of our institutions and system of 
society, which has made this great nation of free and inde- 
pendent citizens what it is to-day, the wonder of the world. 

The Bank of France has continuously felt, but resolutely 
fought against depressing foreign influences by tenaciously 
holding on to its gold, and it attracted more of it recently from 
this country by paying interest in transit. Both London and 



A GLANCE ABROAD 93 

Berlin have long been trying hard to get gold from France, 
but without success. This determined policy, and refusal to 
finance anything that would take money out of the country, is 
intended to fortify the bank of France and French investors, 
against a possible crisis due to their colossal holdings of Rus- 
sian bonds. France is the guardian and watch dog of monetary 
Europe. 

While the situation in Germany is strained, that country is 
taking the lead in European manufacturing enterprises, and it 
is forcing its trade in all parts of the world. To its great ex- 
pansion in industrial work, the locking up of capital there, 
in industrial enterprises of all sorts, is chiefly due. Tempted 
by great expectations capitalists have invested in them very 
heavily, and induced by high rates of interest, the banks, and 
other large money lenders, have loaned enormously on indus- 
trial securities for which there is at present little or no demand 
from investors, and this conversion of their resources from a 
cash, or liquid form to a form much more fixed than they ex- 
pected, has very largely curtailed the supply of loanable funds 
to others, and caused or aggravated, the long existing monetary 
stringency in Berlin. Yet, strange to say, Germany uses very 
few bank checks. The German Government, however, is about 
to consider a plan for regulating their issue and use. Even the 
Government salaries aggregating $211,344,000, or 888 million 
marks, a year, are paid wholly in specie. Here we see 18 
million dollars a month withdrawn from circulation, to return 
slowly. This is almost as bad as our Sub-treasury system. No 
wonder Germany is pinched for money. 

One indirect cause, hitherto overlooked, of the prolonged 
monetary stringency in Europe has been the absorption of gold 
by Egypt, India and China, and it has been sufficient to largely 
neutralize the effect of the increased gold product of South 
Africa, Australia, America and other countries. India has de- 
sired gold of late years, instead of silver exclusively, as before, 
owing to the depreciation in value of the white metal, and China 
has been secretly absorbing it for the same reason, and with 
an ultimate view to placing that nation on a gold basis. 



94. THE FAR EASTERN QUESTION 

Egypt, however, for several years has been largely buying 
gold with the proceeds of its exports, which include a partic- 
ularly fine quality of long staple cotton that commands a much 
higher price than ordinary cotton. This gold is extensively 
hoarded by the Egyptian capitalists instead of being placed in 
the banks there, and entering into the monetary circulation. 
The consequence is that it is lost sight of, and lost to the world 
outside, for Egypt is not only distrustful of banks, but imports 
very little in comparison with what it exports. So it is enabled 
to keep what it gets in gold. This seems to me an answer to 
the question, " What becomes of the new gold ? " 

The world's peace in the future is more likely to be disturbed 
on the Pacific Ocean side rather than on the Mediterranean. 
I predict that within the next few years all the great European 
nations will combine in friendly relations, offensive and de- 
fensive, against the balance of the world, which means against 
China, Japan and India, that represent about two-thirds of the 
world's population. If the United States wants to stand aloof 
and avoid being drawn in on one side or the other, the Philip- 
pines must be parted with. The contest of the European na- 
tions will be for commerce in the East, and the European 
powers, especially Russia and Germany, will do all they can 
to breed trouble between the United States and Japan and 
would be glad to have both nations crippled through a war. 
So long as we hang on to the Philippines we will have a war 
cloud hanging over us. England, owing to her alliance with 
Japan, is in a better position to take care of the Philippines 
than we are, and if we could make a deal with England to 
exchange them for her South American possessions, it would be 
a good thing for us, as, when the Panama Canal is built, those 
islands will be of much more advantage to us than the Phil- 
ippines, and by thus removing the bone of contention we would 
secure our permanent peace. The Philippines will be a great 
source of expense to us without any possibility of obtaining cor- 
responding advantages, therefore, why retain what will keep 
a sore spot open as long as we hold on? We are not a col- 
onizing nation — we have territory enough of our own within 



THE FAR EASTERN QUESTION 95 

our own border, while England on account of her meagre di- 
mensions, requires colonizing for self-existence. 

I am inclined to think that it may turn out to have been a 
mistake for Commodore Perry to have opened the ports of 
Japan to the world — a caged lion being safer than one let 
loose. It resulted in Japan building herself up as a power; 
then followed the war with China, which was instrumental in 
breaking down China's exclusive walled-in method of existence. 
So that now China is also opened to the world like Japan; her 
350,000,000 of people will get themselves on a war protecting 
basis, which will naturally make an alliance with Japan a neces- 
sity, and such an alliance will, after a while, require the Euro- 
pean combination as an offset; otherwise, sooner or later, some 
of the European nations will be apt to meet the same fate as that 
of old Rome at the hands of the barbarians — simply wiped out 
of existence. China and Japan will fight for their self-preser- 
vation and commercial interests. The 300,000,000 in India 
will fight for release from Great Britain's rule, and backed by 
fanatical inspiration, under skilled leadership, will make a dan- 
gerous foe some time. Hence India's natural desires will make 
her akin to China and Japan, arrayed against any foreign foe. 
So India, China and Japan and the rest of the Orient, when 
well disciplined and well equipped and led by Japanese Gen- 
erals, will require the combined European nations to hold them 
in check. The European nations have now had all the wars 
they want and they have gained through them their present 
forceful positions of independence, hence all future great wars 
will be to keep the 800,000,000 of people in Asia in subjection, 
and it will need all of Europe's combined power to do so. 

I will now come nearer home and glance at the rising star 
of the South. 

The continued material prosperity of the South is one of the 
best signs of the times, and it has given a legitimate forward 
impulse to the whole country. This section of the United 
States is in its natural resources more favored than any other, 
and presumably will ultimately become the richest. That in- 
deed is its natural destiny under the industrial and agricultural 



96 THE SOUTH'S PROSPERITY 

development which will come from the growth of population, 
the consequent increase in the supply of labor and the progress 
of education. Here, indeed, you have a splendid prospect where 
distance lends enchantment to the view, and in aiding, encour- 
aging and stimulating this development, on good business prin- 
ciples, none will be able to render better service than you 
Southern bankers. Already the South is progressing in actual 
agricultural and industrial wealth from year to year, and day 
to day, at a rate that would have seemed fabulous not very 
long ago; and the banker shares with the farmer this rapidly 
increasing prosperity, especially when cotton is selling at more 
than twelve cents a pound. It is, therefore, to the banker's 
interest to co-operate with the farmer, for by so doing the 
benefit becomes mutual. You gentlemen, as Southern bankers, 
are favored by Providence in being where you have such a 
wide and splendid field for doing good to others on a safe and 
conservative basis, at the same time that you are building up 
the South, and doing good for yourselves in the time-honored 
business of banking. 

While the South is increasing rapidly in actual and substan- 
tial wealth, it is a good sign that this wealth is not going into 
a few hands, but being widely distributed among all grades 
of the population. The city, the town, the village, the factory 
and the farm give equal and abundant evidence that all are 
sharing this boon of material prosperity, resulting from their 
own industry and the Southern country's legitimate develop- 
ment. You have, figuratively speaking, only to tickle the soil 
with a hoe, and it smiles with a harvest. 

The South produced last year, (1906), crops and other raw 
products valued at two thousand millions of dollars, or four 
hundred and fifty millions more than all the United States, out- 
side of the South, produced in 1880; and last year also its 
manufactured products were valued at two thousand five hun- 
dred millions, or five times more than it manufactured in 1880. 
This is the right kind of expansion. 

Last year, too, the increase in the assessed value of property 
in the South was eleven hundred millions, or three hundred and 



THE SOUTH'S PROSPERITY 97 

fifty millions more than the increase between 1890 and 1900 
Contrast the increase of seven hundred and sixty millions in 
that ten-year period with the increase of over sixteen hundred 
millions in the last two years — 1905 and 1906. 

Such growth is as phenomenal as it is gratifying, not only to 
the people of the South but to the people of the whole United 
States, and it is not a forced but a natural growth. We see 
it most conspicuously in the development of its industries, for 
it has now two hundred and fifty millions invested in cotton 
mills, an amount exceeding the capital invested in cotton mills 
in all the United States in 1880. This alone is a grand exhibit. 

The South also is making pig iron at the rate of three million, 
five hundred thousand tons a year, more than all the rest of 
the country made in 1880; and the capacity of the South 
for iron and steel making is practically unlimited. Turning 
to bituminous coal, the South mined eighty-five million tons 
of it. last year, and in the last fiscal year the foreign exports 
of all kinds from southern ports were valued at seven hundred 
and thirty-four millions against only about two hundred and 
fifty millions in 1881. The South may well be proud of all this 
productiveness. 

So great is this material development and so great the conse- 
quent demand for transportation facilities, that every railway 
in the South may well need double tracking, while to keep pace 
with the South's present rate of progress, thousands of miles 
of new railways will have to be constructed every year for 
many years to come. The South should therefore continue to 
encourage capital no less than immigration, on a scale ex- 
tensive enough to meet all its legitimate requirements. This is 
the work, Gentlemen and Bankers of the South, that lies before 
you. 

Now I come to Kentucky ; good old Kentucky — with which 
is linked the fame of Daniel Boone, and a Civil War record 
of which it may well be proud. 

We, in the North, of course, all know that Kentucky is 
famous for its beautiful women, its handsome men, its splendid 
race horses of the great blue grass region, and the whiskey of 



98 " MY OLD KENTUCKY HOME " 

which Colonel Watterson has told us so much and claims to be 
so fine a judge. His story of " Old Kentucky Rye " is a dream 
of eloquence. 

But first of all to engage our attention are the women, whose 
beauty is only eclipsed by their charm of manner, their refine- 
ment and bright intelligence. They represent an aristocracy 
of the best blood of the American people and I can testify to 
their fascinations, for I won, or rather surrendered to, one of 
the finest of Kentucky's daughters, although for a long time 
supposing that my surrender was impossible even to the fairest 
of the fair; and, therefore, I am glad to come to Kentucky and 
to enjoy the privilege of addressing so many of its stalwart sons 
as are gathered in this distinguished assembly of Kentucky 
bankers, on the general situation, after the financial storm we 
have passed through. I indeed almost feel, in the tender words 
of the popular song, that I have at length reached " My Old 
Kentucky Home." 

As a border State, you are claimed by both the South and 
the North, and your hospitality makes visitors from every quar- 
ter believe that, no matter where they hail from, Kentucky 
knows no North, no South, no East, no West, in the welcome 
she extends to strangers, or friends, from every Sister State. 
When, in after life, these visitors sing the old song, " There's 
no place like home," they will mentally add, " except Ken- 
tucky." 

I thank God that to-day we all know the United States as a 
United Country now and forever, which during the present 
generation has grown, and is growing more United, more liberal 
in a broader sense and each section more just and generous in 
seeking to solve the problem of granting equal rights to rich 
and poor alike. 

In closing I desire to impress upon you that I shall always re- 
tain in my heart a grateful appreciation of your kindness and 
courtesy in permitting me to meet and address you on this 
occasion. 



THE FINANCIAL AND TRADE SITUATION AND 
PROSPECTS 

Address delivered at the Annual Banquet of the National Associa- 
tion of Cotton Manufacturers, at the Hotel Brunswick, Boston, April 
16, 1908. 

IN familiarizing myself with the history, scope and objects 
of the distinguished organization I have the honor to ad- 
dress — The National Association of Cotton Manufac- 
turers — I was impressed by the vast extent and importance of 
the interests it represents through its membership, which covers 
not only New England but the whole manufacturing world of 
the United States, to say nothing of foreign countries in which 
it has a notable representation. 

Such an organization is obviously capable of exerting great 
and lasting power for good in the improvement and develop- 
ment of the cotton manufacturing industry in this country, and 
incidentally it can not fail to benefit all our manufacturing in- 
terests, for there are ties, visible and invisible, that bind them 
all together in a bond of mutual sympathy. 

How immense these interests are is almost beyond computa- 
tion; but we may form some idea of them from the fact that 
the capital stock of the textile mills, print works and bleach- 
eries represented by your Association's own members alone, 
aggregates no less than $334,500,000, without counting their 
surplus. 

Your statistics further tell us that in these mills are 17,157,- 
637 spindles, 1,472 sets of woolen and worsted cards, 5,849 
knitting machines and 67 printing machines. These figures are 
eloquently suggestive of the country's manufacturing enter- 
prise and skill, which have kept pace with its rapid growth, 
and the progress of mechanical science* 
99 



100 THE FINANCIAL AND 

Beyond all this, you have $400,075,000 more capital in the 
affiliated manufacturing industries of cotton cloth, cotton, tex- 
tile machinery, mill supplies and the like, represented by your 
associate members. This, indeed, is a grand exhibit. 

So your association is the representative of $734,586,000 of 
capital, a large item in the national wealth of the United 
States. But, great as it is, it will continue to grow with this 
great and ever-growing nation, and with it will come still 
further improvements in mechanical processes, methods and 
machinery, and a far wider foreign market for our manufac- 
tures, especially in the Orient and South America, where the 
British and the Germans have dominated trade in the past. 

This association in its work for the advancement of cotton 
manufacturing interests, and particularly in the promotion of 
their commercial relations, and whatever relates to improve- 
ments in manufacture, is a valuable ally of the motive power 
that turns the wheels and runs the machinery of the mills; 
and I congratulate you on being united for a purpose so con- 
ducive to both the prosperity of a great manufacturing interest 
and the national welfare. 

I will now turn to the main subject, the financial and trade 
situation, present and prospective, in which I find much that is 
encouraging and favorable to a general betterment of condi- 
tions from this time forward. 

With regard to business conditions and prospects, the general 
sentiment both of Wall Street and the rest of the country is 
optimistic, and to this may be attributed the extensive recovery 
of the stock market that has already taken place since the crisis 
that began in October. Although the dealings in stocks have 
been very largely professional, the improvement reflects the 
confidence in the situation of the rich Wall Street men who 
have led the movement, and confidence, like distrust, is con- 
tagious. 

The absence of any considerable buying by the outside pub- 
lic has been conspicuous, but so also, since the end of 1907, 
has been forced or voluntary liquidation. Hence, there being 
no pressure to sell actual stock, it was easy for the powerful 



TRADE SITUATION IN 1908 101 

bull party at work to advance prices against the short interest, 
which was very large; and the bears were driven to cover 
their contracts at a heavy sacrifice of their previous paper 
profits. But, like the poor, the bears are always with us, and 
their expressed views as to trade conditions and prospects are, 
of course, as pessimistic as those of the majority are the re- 
verse. But the majority rule, and Wall Street never fails to 
discount the future. It is the great financial barometer of the 
United States. 

Leaving sentiment aside, there is ample scope for differences 
of opinion as to the exact situation and the future, so conflict- 
ing are the reports that come to us. In some sections, and 
some industries, very different conditions are reported than 
those that prevail elsewhere, and bankers, merchants and manu- 
facturers in the same towns disagree as to things as they are. 

This shows that we are in that uncertain transition period 
which always follows panic; and how long it will last, is the 
problem that business men all over the country are now trying 
to solve. Meanwhile the rise in stocks, which has been en- 
couraged by the banking interest largely for the sake of its 
influence in promoting confidence among the people of all 
classes, may fairly be looked upon as the precursor of sub- 
stantial improvement in general business. 

Yet, however much we may hope for quick recovery from the 
effects of the crisis, we should always look unfavorable facts 
squarely in the face, for self-deception is the worst kind of 
folly. We must consider the worst, as well as the best, features 
of the situation, in order to gauge it correctly; and the reduc- 
tion of ten per cent, in the wages of cotton mill operatives in 
New England, and the working of many cotton, woolen and 
other mills on part time only, and the shutting down of others, 
shows how much manufacturing industry there, as well as else- 
where, has been affected by the severe ordeal we have passed 
through. 

But, so far as the banking institutions were concerned, Bos- 
ton enjoyed a larger degree of immunity from trouble during 
the crisis, than any other city, a fact that bears testimony to 



102 THE FINANCIAL AND 

their soundness and conservatism. Boston may, therefore, well 
pride herself on this memorable circumstance, the result of 
good banking and good business methods. She had, fortu- 
nately, no speculative capitalists with chains of important 
banks under their control as New York had. 

The crisis accomplished one good thing, and that was the 
sweeping away of this unsound banking, which had become a 
menace not only to New York, but to the whole country. 

The best banking authorities believe that actual business im- 
provement is already making headway, although there is no 
uniformity in it, the recovery in some places, and some lines 
of business, being decided, while in others it is barely visible. 
Thus the Southwest, and its great distributing center, St. Louis, 
report a larger degree of betterment than any other section, 
while Chicago, like the Eastern and Middle States, reports 
comparatively little. 

In the present stage of recuperation, the wage problem is 
forcing itself more and more upon public attention, and es- 
pecially upon that of mill owners and the railway companies. 
The urgent necessity the railways are under of reducing wages 
to offset reduced earnings, is met by the unwillingness, or 
refusal, of the men to have them reduced. They have been 
encouraged in this attitude by President Roosevelt's action, 
and now the labor leaders are urging Congress to legislate in 
support of their position. But Capital has its rights as well 
as Labor. 

The railway companies, as an alternative to reducing wages, 
have proposed an increase in freight rates, but shippers are 
up in arms against this, particularly manufacturers; and the 
authorities of the States, as well as the Interstate Commerce 
Commission, signified their opposition to it. The railways, 
meanwhile, have kept pace, as far as practicable, with the con- 
traction of traffic, by discharging large numbers of their men. 
In this way they have materially reduced their expenses, while 
they report increased efficiency by the labor still employed, 
every man in these times being anxious to hold his place by 
doing good work. 



TRADE SITUATION IN 1908 103 

That is to say, jobs being now scarce, men want to keep 
their jobs instead of being "laid off," as the phrase is. This 
of itself is a wholesome effect of hard times. 

The labor problem is one of peculiar difficulty, and sub- 
stantial, permanent improvement in trade and securities will 
not be seen until there has been a complete readjustment of 
commodities, prices and wages in accordance with the altered 
conditions. To insure steady work for labor, and a fair profit 
for employers, why would it not be wisdom for the labor union 
leaders to agree to a contract to last for the coming four 
months only, consenting to a reduction of 20 per cent, in 



Readjustment is a harmonizing process, and harmony pro- 
motes recovery and the full development of our powers and 
resources. This is what the business situation imperatively 
calls for now, and all business men should do their best to 
foster it, and so work together as a unit, for in unity there is 
strength. We have an example of it in these United States. 

The cotton goods industry in New England has, I know, 
been much more severely depressed by the crisis than was at 
first thought possible; but, fortunately, the losses sustained will 
be the more easily borne because of the large profits of previous 
years. Notwithstanding the cuts made in standard goods, the 
demand for them is still abnormally light, and hence stocks are 
accumulating in the face of the heavy decrease in production. 

No wonder, therefore, that those most intimately concerned 
are more or less at sea as to how long this depression will con- 
tinue, and what the results will be. They see certain grades 
of goods that were selling at 8% cents a yard just before the 
panic now being offered at 5l/£> cents, and this is an object 
lesson that tends to make even the most optimistic of them a 
trifle blue for the time being. But this is precisely the time 
when courage and confidence in the situation are most needed. 
I give you all credit, however, for being equal to the occa- 
sion. 

With eighty-five millions of our own people to clothe — to 
say nothing of the rest of mankind — manufactured cotton 



104 LABOR AND CAPITAL 

products will before long be in demand again at rising prices, 
for civilization demands clothes in hot weather as well as cold. 

Meanwhile, endurance is called for, and will doubtless not 
be found wanting, except where special circumstances impose 
limits to it, and we all know that patience is a virtue. 

Recovery to normal conditions will, of course, be gradual, 
and it is better that it should be so, to ensure permanence. In 
the meantime, it will be a relief to the dry goods trade when 
sales are no longer extensively made by cutting under quoted 
prices more or less sharply. 

The bold, and even aggressive, action of the American Fed- 
eration of Labor in going to Washington and making demands 
upon Congress, and criticizing not only the laws but the de- 
cisions of the Supreme Court of the United States, puts a new 
and serious face on the old contest between Labor and Capital. 
It arouses some apprehension as to the lengths to which Labor 
will go, and how far its political influence may enable it to 
accomplish its purposes. Politicians are ever ready to show 
subserviency to Labor, merely for the purpose of gaining votes 
for themselves. 

We all want to see justice done to Labor, but we also want 
to guard against injustice being done to Capital by Labor, 
and Labor's resistance to a reduction of wages to correspond 
in some degree with the decline in the earnings and profits of 
those employing it, is a practical injustice to all those outside 
the ranks of organized labor. 

The readjustment of wages to existing conditions is, there- 
fore, of the first importance and should be first to receive 
serious consideration, with a view to harmonizing both sides, 
and a prompt settlement. Half a loaf is better than no bread, 
for both Labor and Capital, and it is not to the interest of 
either to kill the goose that lays the golden egg. Their in- 
terests are mutual, but Labor is posing as if they were an- 
tagonistic. It has often done this before, but never more 
conspicuously than now. 

With respect to our foreign market for cotton goods, there 
is plenty of room to widen it, but our exports of these, in 



AMERICAN ADAPTABILITY 105 

competition with England, Germany and other countries, are 
more or less checked by the high price of labor here, and its 
comparatively low price there. Hence we ought constantly en- 
deavor to overcome this disadvantage by keeping ahead of the 
rest of the world in labor-saving devices, and improvements in 
machinery and manufactures. We should try to surpass all 
Europe in the quality, as well as the cheapness of our goods. 

As we are the most inventive of all nations, and the quickest 
to adapt ourselves to new or altered conditions, we shall doubt- 
less find this feasible, if not an easy task, whereas England, 
our greatest competitor in manufacturing, is proverbially slow 
in changing machinery. 

I once asked Mr. Andrew Carnegie what was the main- 
spring of his phenomenal success as a manufacturer of iron 
and steel, and he replied: 

" I always kept foremost in making improvements in my 
machinery and methods of manufacture. Whenever a new in- 
vention that I could use was patented, I secured it at any cost, 
and so kept in advance of all my competitors. 

" At one time I had two million dollars worth of new ma- 
chinery that I was about to install, but a man came to me with 
an improvement in it that he had just patented, and I bought 
his patent and adopted it. In doing this, I had to cast aside, 
as old material, the two millions worth of new machinery. But 
the improvement recompensed me many times over for what I 
had sacrificed to make the change." 

It is in promoting improvements in manufacturing processes 
and machinery that this Association, apart from its general 
utility, can be of great and permanent value to the cotton 
mill industry and kindred manufacturing enterprises. Ready 
adaptability of means to ends is as important in manufactur- 
ing cotton sheetings, and the other products of the loom, as in 
every other business and everything else. 

I remember that in conversation with Admiral Sir Charles 
Beresford, of the British navy, when he was visiting New 
York, he told me of an instance of American adaptability to cir- 
cumstances, that he noticed while in China. The Chinese had 



106 THE TRADE SITUATION 

been long complaining of the want of sufficient width in a 
certain grade of British cotton fabrics that they were using 
and they had asked the English agents from time to time if 
they would increase the width. But nothing came of their 
expostulations and requests, as the agents, after writing home, 
told them the Manchester manufacturers said they would have 
to alter their machinery in order to give them the desired 
width, and this could not be done. 

But the agent of a large American dry goods house, with 
extensive cotton mill interests, arrived at Shanghai, and hear- 
ing the complaint of the Chinese, he said : " Give me your 
order and you can have whatever width you want," and he got 
the order. Sir Charles added: "So, you see, you people are 
smart and give them what they want; besides, you make your 
cotton goods heavier than we do and the Chinese like them 
better because they wear longer, for when the Chinese put on 
such clothes they never come off until they rot off." Here was 
an instance of ready adaptability to the occasion and market 
needs by an American, which the English lacked. 

An illustration of the importance of scientific investigation 
with a view to the discovery of new elements and processes in 
manufacturing, is found in silkine, a fabric closely resembling 
silk, which has come into popular use. It resulted from the 
discovery that the mulberry and other trees on which silk 
worms feed possess properties that could be extracted and 
utilized, to a certain extent, in the production of a silky fibrous 
material which in combination with fine Egyptian cotton, made 
a cloth so closely resembling silk as to be possibly mistaken, 
except by experts, for the silk of the silk worm. Here the- 
oretical and practical science were happily combined with me- 
chanical skill to produce an entirely new material, and doubt- 
less there are many similar opportunities awaiting discovery. 
This Association by stimulating such investigation in mechan- 
ical science may achieve even greater results than it anticipates. 

The world's markets offer a most magnificent opportunity 
for the enterprise of American cotton manufacturers. We 
grow four-sixths of the world's crop of cotton but manufac- 



COTTON EXPORTS 107 

ture only one-sixth. That is to say, we export three-fourths 
of the cotton we grow, leaving England and Germany to turn 
the fibre into yarns and fabrics for other countries in all parts 
of the world. A much larger share of this foreign trade ought 
by right to come to the United States, for the foreign market 
offers a field vastly larger and quite as profitable as the do- 
mestic field, if the extraordinary profits of Lancashire spinners 
during the past few years are to be taken as an index. 

Last year Great Britain exported cotton goods valued at 
$500,000,000, while our exports of cotton manufactures were 
only $26,000,000. During this same period Great Britain ex- 
ported 6,298,000,000 yards of piece goods valued at $400,000,- 
000; our exports meanwhile being only 216,000,000 yards at 
$15,000,000. Here, then, is a field for our best ambition and 
skill. We can not forever endure the sight of seeing other na- 
tions manipulating our raw product at enormous profits, a 
goodly portion of which should remain for distribution on this 
side of the Atlantic. 

There is one respect in which the New England cotton in- 
dustry much impresses an outsider. Your industry, I am glad 
to say, is, and always has been, remarkably free from the evils 
of promotion and speculative enterprise. Furthermore, it has 
most fortunately not been inoculated with the fever for trusts 
and consolidations; although I happen to know that such proj- 
ects have from time to time been presented to your considera- 
tion. Perhaps your refusals to entertain such propositions thus 
far have been due to conditions peculiar to the industry; yet 
I venture to hope that it has been not a little due to the strong 
spirit of individualism which is one of the best characteristics 
of the New Englander; a characteristic which I trust will be 
cherished for generations to come, because it is a most whole- 
some and necessary check upon the paternalistic tendencies of 
the day. One beneficial result of this policy is that the cotton 
industry is adapting itself to the new conditions following' the 
panic with much less friction than in other industries. You 
have lowered prices, curtailed production and diminished costs 
in order to stimulate a revival of consumption in a manner that 



108 THE TRADE SITUATION 

promises to make you among the first in completing the process 
of readjustment. When recovery begins the cotton trade ought 
to be among the first to feel reviving influences. While other 
industries have been using or misusing their newly acquired 
powers of combination to resist natural tendencies, or to squeeze 
out dividends upon grossly watered stocks, you have squarely 
faced the new conditions and trimmed your sails accordingly. 
I have no doubt, therefore, that, with your mills honestly cap- 
italized, you will soon be going along safely and comfortably 
in smoother waters when the trusts will still be struggling 
against adverse conditions simply made worse by foolish re- 
sistance to economic laws. 

The most encouraging feature of our business situation now 
is the prospect of an unusually large wheat crop, winter wheat 
being in extra fine condition, and spring wheat having been 
planted under the most favorable conditions, owing to the sea- 
son for farm work being three weeks earlier this year than 
last. The planting of other crops has also been facilitated 
by good weather, and altogether the agricultural outlook, at 
this date, has very rarely been so promising of bountiful re- 
sults. 

This is a great national blessing, for the foundation of our 
national wealth is our crops. Agriculture is indeed the great 
source of both our national and international strength. It was 
almost entirely from this resource that we were enabled, from 
a merely nominal sum last August, to build up a foreign trade 
balance of 521 millions of dollars in the first eight months of 
this fiscal year, and the large preponderance of our exports 
over our imports still continues, and will make the balance in 
our favor at the end of the year one of unexampled magnitude. 

This curtailment of our imports, especially of luxuries, has 
made the shoe pinch in Europe, for we had been Europe's best 
foreign customer. But, naturally extravagant as we are as a 
people, we can economize with as much ease, celerity and de- 
termination as we can spend, when the necessity to do so arises. 
So we are at present economizing on a grand scale and with 
great success. 



THE CROPS 109 

We have only to consider our unlimited sources of national 
wealth, however, to see that the prospect before us is one 
that should inspire absolute confidence in the gradual return 
of prosperity in all directions. Let us bear in mind that our 
agricultural products yielded us last year as the returns of the 
Department of Agriculture show, $7,400,000,000. 

Mining and manufacturing were the next largest sources of 
our national wealth. The metals mined yielded $3,000,000,- 
000, and this metal product was converted by manufacturing 
into materials that had a market value of fifteen thousand 
millions of dollars. Thus the agricultural products, metals 
mined and metals manufactured, in the year, had a value of 
$25,400,000,000. We may therefore, well and honestly say 
that this is a great country. " Long life to it ! " as an en- 
thusiastic Irishman was once heard to exclaim. " Be jabers, it 
can't be beat ! " 

The market for raw cotton has, of course, been handicapped 
by the depression in the cotton industry and the efforts of the 
Southern planters to advance the price of the staple very ma- 
terially by holding it back instead of marketing it, have failed, 
as they deserved to fail. Cotton is now lower than it was dur- 
ing the crisis, and about as low as at any time in this crop 
year, being 300 points, or 3 cents a pound below the season's 
top notch. But cotton is still king in the factories. 

This decline is equivalent to $15 per bale, or a hundred and 
eighty million dollars on a crop of twelve million bales. So 
spinners and spot buyers in general have not for two years 
had so good a chance to purchase for summer and autumn de- 
livery, and advantageously cover their season's requirements as 
they had last month and this. But spinners have taken more 
than a million bales less of this season's crop since the first 
of September last than in the same time in the previous year. 

The Census Bureau in its final report for the season tells 
us the total crop ginned up to the first of March last was 
11,261,163 bales, including "linters"; and it estimates that 
127,646 bales remained unginned on March first. Allowing 
for the usual under-estimating of the cotton ginned in the re- 



110 THE TRADE SITUATION 

ports to the Government, it follows, from the figures, that the 
spinnable cotton from the last season's crop will aggregate no 
more than 11,500,000 bales. This is with the average net 
weight of a bale, 50 1 1 /^ pounds. 

The statistical or technical position of cotton is therefore 
bullish, notwithstanding the very large falling off in con- 
sumption and the requirements of spinners, this year, both here 
and in Europe, as the indications are that there will not be a 
very heavy or unmanageable load of cotton to be carried over 
into the new crop year, which begins on the first of Septem- 
ber. 

One very hopeful sign of the times is the check that has 
been given to radical state legislation concerning railway cor- 
porations by the Supreme Court of the United States, declaring 
the rate laws of Minnesota and North Carolina in certain re- 
spects unconstitutional. The decision practically denies the 
right of a State to enact and enforce rate laws against inter- 
state railways. This takes the wind out of the sails of a good 
many Western and Southern political agitators, and makes the 
State Courts more definitely than ever subservient to the Federal 
Courts. The clash as to jurisdiction between the two courts 
which we witnessed in the south last year is therefore not likely 
to recur. 

The decision was based mainly upon the unreasonable pen- 
alties prescribed by the North Carolina and Minnesota statutes 
but it sustains beyond all question the contention of the railway 
companies, which are now held to be at liberty to refuse to 
obey any State law reducing rates upon their making affidavit 
that it would reduce their earnings to an unreasonable extent. 
Upon such an affidavit a judge of the United States Circuit 
Court can order a suspension of the operation of the law until 
the law can be shown in court to be reasonable. 

This is a protecting bulwark against radical and confiscatory 
State legislation, resulting from the inflammatory appeals of 
demagogues. By protecting the railways it protects investors, 
and adds to the security of railway property, which, in turn, 
strengthens confidence in that property, and confidence is what 



THE CRISIS OF 1907 111 

is most necessary to recuperation. Let us therefore help to 
increase it. 

It is the desire to promote confidence, and clarify the busi- 
ness situation, that has inspired the recent utterances of Presi- 
dent Roosevelt, and dictated the course of the Federal law de- 
partment. This is commendable and has had a good effect. 

The most spectacular event of the 1907 crisis, and its most 
sensational starting point, in New York, was the failure of 
the Knickerbocker Trust Company under a wild rush to with- 
draw its deposits on the 22nd of October, and the subsequent 
suicide of Charles T. Barney, its president; and the most satis- 
factory event in its later career was its resumption of business 
on the 26th of March, 1908, after many trials and tribulations. 
On that day, too, it received $1,500,000 of deposits more than 
it paid out, a remarkable contrast to the heavy run before the 
suspension. This, and the almost simultaneous payment in full 
of the depositors of the Oriental Bank, a New York State in- 
stitution, were reassuring influences that did much in helping 
to pave the way to general recovery, and stimulate the rise in 
the stock market, which of itself had a good moral, if not ma- 
terial, effect upon the business situation. 

It was not till the fourth day after the Knickerbocker's sus- 
pension, namely, on Saturday, the 26th of October, that the 
New York Clearing House Committee decided to issue Clearing 
House certificates to the banks in the Association needing them 
to pay their Clearing House balances. Then their issue against 
satisfactory collateral deposited with the Clearing House, be- 
gan at once. This was the signal for every other clearing 
house in the country to do likewise, simultaneously. 

On the same day the detailed weekly bank statements were 
suspended, and these were not resumed till the 8th of February, 
1908. Meanwhile a hundred and one millions of the Clearing 
House certificates had been issued and redeemed, except some 
that were held by the National Bank of North America, the 
Mechanics' and Traders' Bank, the Bank of New Amsterdam, 
and the Oriental Bank, which had all failed. But these were 
all redeemed before the end of March. 



112 THE TRADE SITUATION 

It was in the third week of November that the issue of Clear- 
ing House certificates reached its maximum. But the banks 
had reached their largest deficit in reserve in the first week 
of November, when it rose to $54,100,000, a prodigious amount, 
of which the public was in ignorance. 

In Boston at the same time your banks had taken out $11,- 
995,000 of their own clearing house certificates, but this total 
was never increased. After that the banking situation all over 
the country was slowly on the mend. But, owing to the partial 
suspension of currency payments by the banks, caused by runs 
and hoarding inspired by the use of clearing house certificates, 
currency and gold commanded a premium in New York ranging 
from 1 to 5 per cent. This premium was current from the 
time the certificates were first issued till the end of December, 
1907. The hoarding of money was, meanwhile, enormous. 
After that the premium became suddenly a thing of the past, 
and hoarded money was rapidly deposited with the banks. 

It is noteworthy that in the panic of 1873 the New York 
Clearing House issued only $26,565,000 of certificates, and in 
the panic of 1893 only $41,690,000. But these figures merely 
show how very much smaller New York's banking capital, de- 
posits and loans were in those years than they are now. 

The throwing out of employment through the effects of the 
panic of large numbers of men, most of them of foreign birth, 
resulted in a larger exodus of steerage passengers to Europe 
than was ever before known, these aggregating 114,078 in the 
first two months of 1908, while only 50,601 immigrants arrived 
here during those months. The outward rush commenced in 
November and it still continues with little abatement. But as 
a safety valve for unemployed labor it is perhaps to be wel- 
comed for the time being, as it reduces the ranks of the unem- 
ployed, and when the labor of these aliens is again in demand 
they will return as fast as they went. They know on which 
side their bread is buttered. 

Immigration is, however, no longer as necessary to this coun- 
try as it was in pioneer times. Our aim now should be to keep 



SPECULATION NOT GAMBLING 113 

out undesirable immigrants, particularly anarchists, Black 
Hand Italians and Armenians, and rabid socialists who come 
here to make trouble, and preach doctrines of anarchy and con- 
fiscation, entirely inimical to American institutions and national 
as well as individual progress. 

I now come to the markets for stocks, bonds and speculative 
commodities, and the recent indiscriminate attacks upon them 
by Mr. Bryan and others both in and out of Congress, as hot- 
beds of what they call gambling. 

As one of the oldest members of the New York Stock Ex- 
change I can, from my long experience, testify to the integrity 
and high character of its membership, and the strict discipline 
of that Association over those composing it. Any breach of its 
rules, any deviation from the line of fair dealing, or anything 
prejudicial to its interests, is promptly investigated and as 
promptly punished, when proved to the satisfaction of the 
Governing Committee, by fine, suspension or expulsion. But it 
is very rare for a member to be either charged with, or found 
guilty of, chicanery of any kind. 

It is therefore unjust and outrageous for Mr. Bryan and 
others who have denounced the New York Stock Exchange to 
call it a gambling arena and its members gamblers. They are 
brokers in a free market, a market open to all the world, and 
they are ready to receive and execute orders from all the world, 
and whether or not these orders are for investment or specula- 
tive account, it is not for them to inquire. Still less is it for 
them to discriminate against speculation, when speculative far 
more than investment dealings are the life of every stock ex- 
change in the world. A stock exchange to have any value 
must be a free market. 

Speculation in stocks is no more gambling than speculation in 
real estate, or merchandise, although different in degree, but 
there may be excesses in speculation as in everything else. The 
stock exchange as a body should not, however be held respon- 
sible for the excesses of individual speculators, or for the dis- 
honesty of men who embezzle in order to get money for the 



114 STOCK EXCHANGES NECESSARY 

pu^ose of speculating. Gas should not be blamed for caus- 
ing the death of a man who deliberately locks his room door, 
shuts his windows tight and turns on the gas to die. 

Those who know Wall Street well, as I do, know how false 
a view of it Mr. Bryan and others, including certain members 
of Congress, have given to the public. If they really had 
known Wall Street well, and had any conscience, they would 
not have said what they did say. They have misrepresented it 
grossly and unjustifiably, and in their moralizings upon it they 
have not reasoned, but ranted. 

Some of them have even advocated the entire elimination of 
the stock exchange. They would thus invite financial chaos 
and leave investors, the banks, insurance companies and all 
other corporate holders of stocks and bonds practically without 
a market for their securities in which either to buy or sell. 
This would be putting back the hands of the clock of progress 
with a vengeance. It would be going back to the wigwam and 
the canal boat, but of course it would never be tolerated and 
therefore be impossible. 

Yet this slandering and mudslinging campaign by representa- 
tives of both the great political parties for political effect is 
none the less injurious and reprehensible because it can never 
have any substantial result, much less the destruction of Wall 
Street. It is scandalous abuse of which we may have more 
before the November election, but it is already high time that 
it should stop in the interest of truth and justice and the public 
welfare. 

These assailants of the New York Stock Exchange would 
also abolish all other stock exchanges, and the Chicago Board 
of Trade, as well as all the other grain and provision exchanges, 
and all the cotton exchanges in the country that deal in futures. 
Perhaps they are not aware that the farmers and planters of 
the West and South derive, or can derive, great benefit from 
having a free market for " futures " open to them, for it en- 
ables them to sell their crops before they are harvested, if the 
prices are satisfactory and they want to make sure of them. 



A PURER ATMOSPHERE 115 

This applies also to the Coffee Exchange and importers of 
coffee. 

To drive dealings in time options from the Produce and 
other exchanges would be to drive them to Canada, Liverpool 
and London, and let the markets there make prices for us, 
instead of making them for ourselves, all of which shows the 
absurdity of this clamor against speculation in stocks and specu- 
lative commodities. Speculation is thus stigmatized as gam- 
bling with no more reason or justice than the inevitable risks 
of ordinary mercantile trade could be called gambling, for no 
one can engage in trade of any kind without taking risks. 

Now that the storm of the crisis has passed away, and the in- 
vestigation and prosecutions that have taken place have laid 
bare the corporate evils that were rife among us, including 
railway rate rebating and various forms of looting and whole- 
sale graft by controlling capitalists, we have come into a purer 
business atmosphere. Corrupt, plundering and law breaking 
officers of banks, and railway, insurance, and other large cor- 
porations have, in many cases, been exposed and shown the 
error of their ways, and we have in consequence a higher busi- 
ness morality than we had before we passed through this ordeal 
of purification. In other words, the house cleaning we have 
had has done us good, and this of itself is a compensation that 
can hardly be overrated in its future influence. Banks and 
trust companies and railways, insurance and other corporations 
have been freed from much unsound and dishonest management, 
and also loose, grafting and speculative practices, and we have 
in their place that higher moral tone which is safeguarded by 
greater publicity of accounts and more rigid official examina- 
tions under new and stricter laws than ever before. 

Thus temptation to chicanery and other corporate wrongdo- 
ing, and abuses, by those in control of corporations, is largely 
reduced, and this is important, for an old proverb tells us that 
opportunity makes the thief. 

Good grounds for an optimistic view of the situation and the 
future, you will all acknowledge, can be found in our unequaled 



116 THE TRADE SITUATION 

and immense natural resources and their uninterrupted devel- 
opment. These and the enterprise of our people and our free 
institutions and popular government, which makes us all sov- 
ereigns in our own right, are national blessings. They fortify 
our national life, and leave our splendid growth and powers of 
achievement unchecked; and our wonderful progress in the past 
will no doubt be eclipsed by our still greater and grander 
future, with the United States of America the foremost nation 
in the world. 

In all this progressive movement the cotton and other mill 
industries of New England, and the rest of the country, will 
share; and in this natural and legitimate expansion, gentlemen, 
you and your successors may look forward to, and find, the po- 
tentiality of wealth beyond the dreams of avarice, as Andrew 
Carnegie did in Pittsburg. From such a great American object 
lesson for manufacturers, as Carnegie, you should all derive 
a vast amount of encouragement, and that hope that springs 
eternal in the human breast. 



THE NATIONAL CORPORATION PROBLEM 

Address delivered at the First Annual Banquet of the Economic 
Club of Manchester, New Hampshire, May 20, 1908. 

THE political and popular clamor against the industrial 
Trusts, with which we have been long familiar, was due 
primarily to the anti-monopoly sentiment of the people, 
but in a far greater degree to the crushing of competitors, 
through unlawful and unjust methods, by some of the conspicu- 
ously large corporations, as Government prosecutions have 
shown. 

Hence, public hostility to the Trusts increased, and remedial 
legislation was called for. The general feeling was that as a 
Trust had neither a body to be kicked nor a soul to be damned, 
it should be handled by the law, without gloves and with the 
utmost rigor. 

The exposure of the railway rebating evil by which compe- 
tition had been destroyed, and great monopolies built up 
resulting in colossal fortunes for their principal owners, added 
fuel to the fire of this indignation; and similar abuses and un- 
lawful practices by certain Trusts showed how strong com- 
binations of capital had preyed upon, and killed off, weaker 
ones, and individual traders, to an extent that made the in- 
justice of it a national scandal. 

Owing to the inflamed state of the public mind, some of the 
laws enacted to remedy the evils complained of may have been 
too drastic for the purpose. But excesses of this kind correct 
themselves. Such laws are either not enforced, or repealed 
after being enforced. As General Grant once said to me, — 
" The surest way to repeal a bad law is to enforce it." We 
have always, fortunately, a safety valve in public opinion, which 
117 



118 THE CORPORATION PROBLEM 

never errs in the long run, and the public opinion of a nation 
is reflected in its laws. 

The immensity of corporate interests in the United States is 
suggested by the fact that, including prominent city banks and 
Trust companies, there are more than 20,000 corporations re- 
ported in the manuals devoted to them. Of these 1,513 are 
active, operating railway companies, 1,129 electric traction com- 
panies, 1,158 gas, electric light and electric power companies, 
267 water companies, 259 telephone, telegraph and cable com- 
panies, 1,510 active, operating and producing industrial and 
miscellaneous companies, 880 active or operating mining com- 
panies, and 13,500 banking, insurance and other financial com- 
panies. 

The railway companies cover 222,013 miles, and they had a 
capitalization and bonded debt, on the 1st of January, 1908, of 
$13,908,456,846, at par. 

The industrial and miscellaneous companies had at the same 
date a capitalization of $9,849,833,000, and the stocks of all 
the corporations in the United States aggregated more than 
$33,600,000,000 at par, exclusive of banks, Trust companies 
and other financial institutions. 

In connection with the present enormous railway mileage of 
the country, it is interesting to note that as recently as 1865 
there were only 3,085 miles in operation; and in 1879 — the 
year of specie resumption, after the long Civil War suspension 
from 1861 — this total had only increased to 86,556 miles. 

These figures remind us of the great rapidity with which new 
railway corporations were subsequently organized, and laid their 
tracks, while old ones extended their lines from Maine to Cal- 
ifornia, from the St. Lawrence to the Gulf of Mexico. 

We can also remember the Nation's phenomenal progress 
simultaneously in all other directions, and that, before 1880, 
Trust companies and industrial corporations were few and far 
between in comparison with the great multitude of those with 
which we have now to deal. The modern era of these striking 
features of our business life, and the development of the in- 



CONCENTRATION OF RAILWAY CONTROL 119 

dustrial Trusts which now cover the country, East, West, North 
and South, had then hardly commenced. 

Yet our great corporations, and our great railway systems 
are still growing and multiplying, and will continue to grow 
and multiply to meet the wants of our rapidly increasing popu- 
lation for generations to come, till every part of our vast terri- 
tory is thickly settled. Railways and manufacturies represent 
our largest corporations, and are next in importance to our un- 
limited agricultural resources and mining interests. 

They remind us too, that while these and all other corpora- 
tions need regulation by law, this regulation should never ham- 
per, or interfere with, their legitimate activities and expansion, 
however strict and severe it may be in prohibiting and punish- 
ing wilful violations of law and other abuses of power. 

The corporation problem in this country is still new and un- 
solved, but it has assumed immense national importance through 
the growth of the large industrial Trusts during the last twenty 
years. Before that they were unknown, and they have to a 
large extent revolutionized business and business methods in 
the United States. 

It is significant of the power and extent of our railway sys- 
tems that these — fifty-seven of them in all — operate, or con- 
trol, six hundred and eighty-eight subsidiaries, or jointly con- 
trolled railway companies, embracing 196,425 miles of road, 
with an aggregate of outstanding stock of $4,750,325,000, and 
$8,180,780,000 of bonds, a total for both, at par, of $12,931,- 
154,000. These figures are exclusive of stocks and bonds held 
in the treasuries of the companies. 

Thus nearly ninety per cent, of the steam railway mileage of 
the United States is operated, or controlled, by the fifty-seven 
systems. The remaining ten per cent, of the country's railway 
mileage is composed mainly of short, independent and discon- 
nected lines, some of which are run at a loss, and many without 
reporting any considerable profit. 

Railway corporations in this country are therefore, except 
as to this unimportant ten per cent., a great consolidated force, 



120 THE CORPORATION PROBLEM 

for the fifty-seven systems that control ninety per cent, of the 
mileage, are equivalent to so many Trusts, and these can join 
hands in a solid phalanx at any time for any lawful purpose, 
and practically form one great railway Trust spanning the con- 
tinent, a gigantic power that but for law would be a monopoly. 

So the National corporation problem is largely one of the 
railways, and it involves the best way for the Federal Govern- 
ment to regulate these and all the corporations, in the interest 
of trade, commerce and the people, and to do this without im- 
posing unnecessary restrictions upon their legitimate operation 
and development. 

They resulted from the enormous and rapid increase of our 
population, industrial activity, industrial development and 
wealth, and the consequent increase of competition in all 
branches of trade. Corporations, good, bad and indifferent, 
sprang up like mushrooms, and then combinations of corpora- 
tions into larger ones took place, and we had Trusts. 

These were organized ostensibly to secure economies in man- 
agement which, in conjunction with their large capital, would 
enable them to compete advantageously with smaller concerns 
in the same lines of business, and give them more or less con- 
trol of their markets. 

But in doing this they of course threw many out of employ- 
ment, and forced many of their smaller competitors out of 
business. Consequently the popular sentiment against them at 
first was very strong and the cry of " Monopoly " was often 
heard. 

It was found however that the rise in prices that had been 
generally apprehended as a result of the formation of Trusts 
did not occur, at least not to any disturbing extent. So public 
hostility to them quieted down, although their struggling and 
ruined competitors still felt sore over their rivals' success, all 
the more so when it was discovered that most of them were mak- 
ing far larger profits than had ever before been made in the 
same industries. If this had always been done honestly there 
would have been no reason to complain. 

The great industries dominated by Trusts included, besides 



IMPRISONMENT, NOT FINES 121* 

petroleum and sugar refining, iron and steel working, copper 
and other metal and mineral mining, India rubber and tobacco 
manufacturing, distilling and also many miscellaneous manufac- 
tures, in addition to those in other lines than manufacturing. 
The traders who had occupied these fields of industry before 
them looked small indeed beside these new corporation giants. 

Discrimination in favor of one and against another by rail- 
way corporations was an iniquity that built up large fortunes 
for a few and starved and ruined many. But that, let us hope, 
has been effectually stopped forever by its exposure and denun- 
ciation by President Roosevelt and the Federal legislation 
which it provoked; and any revival of it should be punished 
with the utmost rigor of the law, not by fines but by imprison- 
ment of both the giver and receiver of rebates. 

Fines can be easily paid by large corporations, however much 
their stockholders may suffer, but being placed behind iron 
bars is always distasteful, if not terrible, to their officers; and 
it leaves a stigma that they are anxious to avoid. 

Their aversion to being disgraced in the eyes of their fam- 
ilies and friends by imprisonment as criminals will always tend 
to make them extremely cautious not to incur this risk, however 
willing through lack of moral scruples, some of them might 
be to violate the anti-rebate laws if they could do so with 
impunity, and however much they might be aware that lawless- 
ness, apart from the question of dishonesty, is anarchy, and 
therefore unpatriotic. 

Corporation looting in its various forms, and political con- 
tributions of corporation money, are, like rebating, equally 
wrong in principle, and should be punished with equal severity, 
and involve compulsory restitution. That is really the only 
way to prevent the recurrence of such wrongs by the unprin- 
cipled. 

Judge Anderson, in charging the jury at the trial of John R. 
Walsh in Chicago for bank frauds, said : " The law presumes 
that every man understands and foresees the natural, legitimate 
and inevitable consequences of his acts. The color of the act 
determines the complexion of the intent. The intent to injure 



122 THE CORPORATION PROBLEM 

or defraud may be presumed when the unlawful act which re- 
sults in loss or injury is proved to have been knowingly com- 
mitted." 

Many of the irregularities, abuses and questionable methods 
of large corporations resulted no doubt from the haphazard 
speculative manner in which they were organized. Their pro- 
moters and organizers had always, or nearly always, speculative 
objects in view in forming the combinations we call Trusts. 
They looked for their first profit in the stock deals involved in 
them, and were generally willing to give extravagant prices, 
payable in stock, for properties that they wished to control 
and bring into these new Trusts. 

This, of course, caused over-capitalization, and in many cases 
this over-capitalization was equivalent to several times the 
actual value of the properties embraced in the Trusts created, 
and in some instances to many times their value. Then, too, 
extravagantly high salaries were given to the men in control of 
such organizations for their services as officers. They were 
generally " on the make," working for Number One — that is 
for themselves — as well as the Trusts. 

It often followed that, in their efforts to float their stock and 
pay dividends, loose and none too scrupulous practices were re- 
sorted to, and more or less false and exaggerated representa- 
tions were made as to actual values and conditions. So greed 
and draft dominated not a few of them more than did the in- 
terests of their outside stockholders. 

They were in a position where they could help themselves 
to the cream, and leave the skimmed milk for the investors, and 
not many of them neglected their opportunity to skim the 
cream, and to feather their nests more or less, in the last few 
years, before stricter laws were passed by Congress and the 
States for the management of corporations. 

The laxity of both the State and Federal laws with regard 
to corporations, until recently, permitted much to be done in the 
dark, which is now rendered impossible by the light of publicity 
that is required by the new enactments, as well as by various 



TRUSTS SERVE USEFUL PURPOSES 123 

prohibitions of dishonest practices, besides that crowning evil, 
railway rebating, that were before prevalent. 

Campaign contributions by corporations were wrong, morally 
and legally, not because political contributions are wrong, but 
because they were a wrongful and illegal use of corporate 
money. But the controlling officers of many large corporations, 
particularly the New York City Railways and large life in- 
surance companies, were woefully blind to this, so accustomed 
had they been to handling corporate funds in their charge as if 
they owned them, and could do as they pleased. 

These transactions were almost on a par with some of those 
connected with the purchase at a fictitious price of a certain 
Street Railway — a practically non-existent line — in which 
large capitalists were concerned. Here was a flagrant instance 
— involving a diversion of half a million dollars — of the do- 
ings of men controlling a great street railway system, at the 
expense of the stockholders whom it was their duty to faithfully 
serve and protect. 

That many dishonest acts by men controlling corporations 
have gone unpunished is greatly to be regretted, and looks 
very much like a miscarriage of justice. But let us believe 
that dishonesty was exceptional and honesty the rule in cor- 
porate management. 

Where punishment is inflicted for infractions of the law 
involving larceny, it should be the same as for giving or receiv- 
ing railway rebates. Fines have no terrors for wealthy evil- 
doers who violate the law for their own sinister ends at the ex- 
pense of others. 

The popular hostility to the Trusts, however, was often 
too indiscriminate. It made little or no distinction between the 
good and the bad. The Trusts were, as enlarged corporations 
with large capital, a national trade development of our time. 

Aiming at greater production, economy and efficiency, through 
their large means and modern improvements, than had been 
possible with small concerns, they marked a forward step in 
that progressive industrial, commercial, and financial march 



124, THE CORPORATION PROBLEM 

which has created our vast national wealth and made this 
country the Wonder of the World. 

But of course it was inevitable that these Trusts, with their 
large capital, and new and improved methods and machinery, 
should supersede to a great extent the old order of things, 
and take away from them the business of others that they 
competed with. It is only natural that the stronger competitors 
should more or less dominate or destroy the weaker, and the 
success of the Trusts was merely another illustration of the 
survival of the fittest. This is a law of Nature which it is 
useless to resist. 

It is therefore not against the creation of Trusts, but against 
injustice, lawlessness, misrepresentation, looting and other evil 
practices in the management of Trusts that we have a good 
right to complain, and against which the strong arm of the law 
should be always raised. A well and honestly managed Trust 
can do business as legitimately, and with as much or more, ad- 
vantage to the public, as any individual, any firm, or any small 
corporation can. 

But there is constantly greater temptation to wrongdoing by 
those in control of large corporations. We have seen many in- 
stances of the abuse of power in these, not only in forcing the 
allowance of rebates from the railways, but in other unjustifiable 
ways calculated to get the upper hand of competitors, or kill 
them off entirely, as well as in the misuse of corporate funds 
for speculative purposes, to say nothing of appropriations 
through that too common form of dishonesty called graft. 

Men in high positions in corporations have often done in 
secret, in the way of chicanery what they would have been both 
ashamed and afraid to do openly. But now that the old prac- 
tices have been exposed and the new laws require publicity of 
accounts, and have closed the door to the many opportunities 
for fraud and graft that were before open, through severe pen- 
alties, we have a purer business atmosphere and a higher moral 
tone in our business life. So some good has come out of our 
corporation scandals, and public sentiment has been aroused 
against corporate corruption and all abuses of power. 



THE LIGHT OF PUBLICITY 125 

Corporations no less than individuals of course have rights 
which should be scrupulously respected by both our Federal and 
State legislators. But one defect in corporation legislation by 
Congress, as well as the States, has often been that it failed to 
make a sufficient distinction between what may be called private 
and public corporations. It stands to reason that railway and 
industrial corporations, and all public utility companies, that 
have sold their stocks and bonds to the public, and had them 
admitted to dealings on the stock exchanges should have their 
condition subjected to stated periodical examinations and pub- 
licity which would be uncalled for in the case of smaller cor- 
porations that had not marketed any of their securities, and 
whose earnings and affairs had no interest for the general 
public. 

The railway companies are now required by law to keep 
their books and accounts in a certain prescribed form under 
the supervision of the Interstate Commerce Commissioners, and 
this is the right kind of publicity, for it permits of no cheating, 
nor of any neglect to comply with the law. The record of 
each day's business tells the story, and these books and accounts 
are all the time open to Government inspection. But such 
regulations would be unreasonable if applied to the small pri- 
vate industrial corporations. 

Honestly managed and solvent corporations have nothing to 
fear from publicity as to their financial condition, although 
they have a perfect right to guard their trade secrets from 
publicity, provided they are free from any dishonest or illegal 
taint. Well and honestly managed public utility corporations 
are our best protection against municipal ownership, which in 
this country would be sure to involve political corruption, and 
probably poor service. 

It would be a step toward Socialism, and Socialism in this 
country would be antagonistic to our Government, our institu- 
tions, and our national progress, and should be resolutely re- 
sisted and frowned upon by all Americans. It is a weed trans- 
planted from the hotbeds of European despotism that can never 
flourish here, for our soil is entirely unsuited to it. 



126 THE CORPOEATION PROBLEM 

Publicity at regular intervals of earnings and conditions by 
railway, industrial and other corporations creates confidence 
where confidence is merited, while exposing weakness where 
weakness exists. By eliminating that which is unsound and 
dangerous, it benefits the sound and the safe, and removes 
grounds of suspicion injurious to all. 

Secrecy is the defense of the weak, and they naturally shirk 
the light; but the public interests demand that all the large 
corporations be exposed to the light, and stand or fall according 
to their merits. This applies to banking and insurance as well 
as manufacturing, trading and transportation corporations, all, 
in this respect being in the same class. 

To facilitate this publicity and ensure simplicity and ac- 
curacy the books and statistics of corporations should be kept 
in a clear and systematic manner that any examiner could easily 
understand. I say this because in some large corporation fail- 
ures that have occurred much irregularity and confusion of ac- 
counts were found. 

This not only delayed the receivers in ascertaining the amount 
of the assets and liabilities, but showed that the officers of the 
failed concerns could not have been very closely conversant 
with their precise condition when they suspended. Bad or care- 
less bookkeeping, accounting and office management has led to 
many important corporation failures that good work in that 
department might have averted. 

Corporations should, therefore, be careful to supervise their 
clerical forces closely, and also employ accountants to make 
periodical examinations and audits of their books, for account- 
ing and statistics in these days have been raised to the im- 
portance of a science. 

Old-fogyism, wherever it still exists, should be made to give 
place to improved and time-saving modern methods. These 
may be small matters to dwell upon, but a close observance of 
them is necessary to good corporate management in this age of 
close competition and aggressive enterprise. All that is out of 
date, or needless, or a drag upon progress, or which handicaps 
business development should be promptly discarded. 



RAILWAY FREIGHT RATES 127 

The political influence of large corporations has so far not 
received as much consideration as it deserves. But it is a factor 
in our State and National business life that is more and more 
making itself felt in an unobtrusive but none the less ef- 
fective vray. 

We have seen this manifested in the strong and numerous 
protests, emanating from this source, against the National Gov- 
ernment and the Interstate Commerce Commission consenting to 
the general rise of freight rates conditionally agreed upon by 
the Eastern and other railways. In making these protests to 
President Roosevelt the corporations are well aware that he can 
control the action of the Interstate Commissioners in the matter, 
and by a word cause them to either give or refuse permission 
to raise railway rates. They know too that his keen political 
observation and insight will cause him to weigh and consider 
with the greatest care the effect of the Administration's course 
in consenting, or refusing to consent, to this inconsistent 
proposal to raise railway freight rates in such a period of 
trade depression as this, when more than 413,000 cars are 
idle. In view of the Presidential Campaign, and the issue to 
be decided at the polls next November, not merely by the 
politicians, but by the people, he will not underrate the impor- 
tance of the Railway Corporation question as a political fac- 
tor. 

We saw that the President's communication to the Interstate 
Commissioners a short time ago directing an investigation by 
them in relation to the need of the proposal of the Southern 
railways to reduce wages, resulted in an immediate abandon- 
ment of their announced plan to reduce them, and in fact all 
the railways were similarly influenced by that act of his. He 
knew that the reduction in one section would be the entering 
wedge for a general reduction, and perhaps a strike. 

So the railways switched off the reduced wages line to the in- 
creased freight line, thinking that the President, from what he 
had said, as he surveyed the situation from his political observa- 
tory, would prefer the alternative of higher freight rates to 
lower wages. Here comes the rub. It is a two-edged political 



128 THE CORPORATION PROBLEM 

sword that President Roosevelt, above all others, will see re- 
quires to be very cautiously handled. 

Without great care in this difficulty the administration might 
find itself between the upper and the nether millstone of a 
very ugly question, and in active antagonism with either the 
large corporations and the whole mercantile community, on the 
one hand, or the railways, on the other, with both sides bringing 
all their political influence and artillery into play. 

Here would be an acrimonious contest that could not fail to 
affect political results in November. The President would very 
naturally be anxious to avert it, but how to reconcile the two 
opposite courses of saying yea or nay to the railways, and 
secure harmony between them and Labor, is a problem hard to 
solve. 

In connection with the proposition agreed to by the officers 
of the Eastern trunk railways to advance freight rates from 
ten to fourteen per cent., it is well to consider that the gross 
earnings of all reporting lines in February showed a decrease 
of twelve and one half per cent, from those of last year, and 
that in March the decrease was 14% per cent., the result of 
the prevailing industrial depression, particularly in the iron, 
steel and coal trade and the New England cotton and woolen 
milling industry. 

The proposed increase would, of course, have to be added to 
the cost of the commodities carried, and saddled upon the con- 
sumers. It was therefore to be expected that a flood of indig- 
nant protests would come from these, as well as from large 
shippers and the rank and file of the mercantile community. 
They have urged the injustice of such an advance in these 
hard times, and in the teeth of an average contraction of fully 
twenty-five per cent, in the demand for goods. But the rail- 
ways in reply point to the refusal of the U. S. Steel Corporation 
and other large trade combinations to lower their prices for rail- 
way materials, as well as to the political and other work of the 
Labor Unions, at Washington and elsewhere, in support of their 
determination to keep wages up to the highest figures of pros- 
perous times, refusing meanwhile to listen to any terms of wage 



AIMING TO CONTROL PRESIDENCY 129 

readjustment to the situation as it is. These are extenuating 
circumstances, but two wrongs do not make a right; and the best 
way of adjusting these differences is a difficult corporation and 
labor problem of itself. 

It may surprise some to learn that the great power concen- 
trated in the President's hands by Congress has made the great 
corporations, including the railway companies and banking in- 
stitutions, ambitious and eager to control the Federal Govern- 
ment itself, and they are resolutely working to control it as far 
as they can by the force of capital, but as unobtrusively as 
possible. They know that their designs to make the money 
power supreme would arouse popular indignation, so they are 
engaged in a still hunt, and Samuel J. Tilden used to say that 
this is what wins in politics and a political campaign. 

The Government control of the Trusts, the railways, and 
other corporations has become so great that it is hardly to be 
wondered at that the great object that they have now in view 
should be to control the Government's policy, and already they 
are sub rosa powerful political machines. In this connection it 
is significant that some large railway and banking interests 
have identified themselves with the Presidential movement. 
Every fresh extension by Congress of the President's power 
over corporate interests has made the large corporations — in- 
dustrial, railway and financial — with their enormous capital 
and resources, more and more bold and determined in their ef- 
forts to control the Presidency, if indeed that is possible; and 
this motive underlies a great and growing amount of corruption 
in our National politics. 

We can therefore see in the attitude and views of the great 
corporations, with their wealth and political influence, a possi- 
ble menace to our Republic and its free institutions. 

This is a matter of vast and vital concern to our citizens, and 
it is high time that their serious attention should be called to 
the fact that the powers with which the President is invested 
over the business of all classes of corporations have become 
so extended and far-reaching that the Trusts and their railway 
and financial allies, are ready to sacrifice any moral principle, 



ISO THE CORPORATION PROBLEM 

and pay any price within their power, to control the policy of 
the Federal Government. 

So the greatest of all the National corporation problems we 
have now to deal with is how to curb and regulate, without in- 
justice, the increasing political power and pernicious political 
activity of these corporations, and prevent them from accom- 
plishing their great object, Government control, for this in- 
deed would be a National calamity. 

To President Roosevelt we are almost entirely indebted for 
the development we have witnessed in the National control of 
corporations under the authority of that provision of the Con- 
stitution which invests Congress with the power to regulate 
commerce between the States. This was a great task well per- 
formed, and only second to it in importance has been his activity 
in promoting Congressional legislation for the investigation, 
conservation and increase of the country's natural resources, 
including the irrigation of arid regions, the establishment in 
the public domain of forest reserves, which had been too long 
neglected, and the extension and increased efficiency of the 
Geological Survey. 

Closely allied to these National interests and the Federal 
management and control of corporations has been the Presi- 
dent's direction of the work of the Department of Commerce 
and Labor, the act creating which provides that it shall be its 
duty " to foster, promote and develop the foreign and domestic 
commerce, the mining, manufacturing and fishing industries, the 
labor interests and the transportation interests of the United 
States." 

As all the business of the country outside of banking and 
finance, is practically covered by this Department, its impor- 
tance can hardly be overestimated, especially in relation to the 
great corporations; and it is in co-operation between these and 
the commercial organizations of the United States, in common 
with all the other designated business interests of the country, 
and this branch of the Federal Government, that harmony and 
good corporate management can be best promoted, and the polit- 
ical power and aspirations of the Trusts, the railways and the 



THE MONEY POWER 131 

other corporations be effectually regulated and permanently 
curbed. To this result that Department's energies should stead- 
ily tend, for the political domination of this country by Trusts 
and the money power would be an intolerable evil, however much 
it might be hidden and disguised. It would be inimical to our 
form of government, and the spirit of all American institu- 
tions, and to ward off this threatened danger, by nipping it in 
the bud, is a public duty that the Government owes to the people. 

It is indeed likely to become our great National Corporation 
Problem, all the other problems relating to the Trusts, the 
banks and the railways being subordinated to this in impor- 
tance, for it aims at political power for Capital, which would 
undermine the very foundations of our great and glorious repub- 
lic — the Government for which the patriots of the American 
Revolution fought so bravely at Bunker Hill, and then, crowned 
with victory, made 1776 glorious with the Declaration of Inde- 
pendence. 

But forewarned, forearmed, and public opinion, the great 
court of appeal, will always govern and keep the Trusts as well 
as all our other great business interests in line for the advance- 
ment of our National welfare and the prosperity of the people. 



CURRENCY LEGISLATION — THE MONEY POWER 
AND THE BUSINESS OUTLOOK 

Address delivered at the Annual Banquet of the Maine Bankers' 
Association, Waterville, Maine, June 20, 1908. 

THE recent passage by Congress, at the eleventh hour, 
of the Emergency Currency Law was an event of prime 
importance, notwithstanding its limited scope. It is 
avowedly intended only to make provision for the possible con- 
tingency of a panic. But doing so it already exerts a reassur- 
ing influence, and by the confidence it will inspire in times of 
monetary disturbance and stringency it will tend to prevent 
panics. It thus serves a double purpose. 

It will supersede the need of Clearing House Certificates, in 
case a panic should be experienced, and give us new national 
bank notes, of the emergency brand, to a maximum amount of 
five hundred millions of dollars, instead. This will prevent the 
disturbance of our inland exchanges, the partial suspension of 
currency payment by the banks, and the hoarding of currency 
with a consequent premium, owing to its scarcity, as was wit- 
nessed from the latter part of October till the end of December, 
1907, the premium ranging from one to five per cent. 

It will be a staff for us to lean upon in time of danger and 
stress, although we have no present use for it. Practically, it 
will increase the money in the national banks, within its max- 
imum issue limit, to any amount which they may desire and 
can secure by deposits of their available assets, subject in the 
case of each bank to the approval of the Government. 

Meanwhile we have in preparation a comprehensive financial 
measure under the same Act of Congress. By creating a Na- 
tional Monetary Commission to undertake this important work 
it supplied a long-felt want. 

132 



THE EMERGENCY CURRENCY LAW 133 

The New York Clearing House did well to take the initia- 
tive promptly in forming a National Currency Association for 
carrying out the provisions of the new law, if it ever becomes 
necessary to act on them; and the clearing houses in all other 
cities are preparing to follow the example of New York by 
forming similar National Currency Associations for the same 
purpose, in conformity with the law. With these the Treasury 
is actively co-operating. 

Thus they will, one and all, from the Atlantic to the Pacific, 
be equipped with the necessary facilities for dealing with panic 
by instantly and simultaneously securing the new currency and 
issuing it as fast as needed. This general response to the new 
law is, in itself, a source of monetary strength. 

These local associations will form, in the aggregate, not only 
a great National Currency Association, but a sort of National 
Fire Brigade to extinguish the fires of panic whenever and 
wherever they appear; and there is every reason to suppose 
that, in co-operation with the Treasury Department, they will 
do their work effectually, if called upon. Panic will thus, 
whether it comes or not, be divested of more than half its 
terrors. 

There is, consequently, an element of financial security in 
this emergency measure. Although the law itself makes no 
change in the fundamental and general character of the Na- 
tional bank currency, it will inspire confidence when confidence 
is most needed. As a preventive of panics the new law may 
therefore prove almost as important as it is for the relief of 
panics. This should be more fully realized than it is. 

Its provisions retain the main features of the Aldrich bill, 
with additions from the Vreeland bill, and, although a com- 
promise measure, it is better than either of the other bills be- 
cause it contains what was best in both, while identical in its 
objects and underlying principles with both. What more could 
be asked, or expected, of an emergency measure, especially one 
regarded as only a temporary expedient and limited by its terms 
to six years? Yet it makes several important changes involv- 
ing the banks. It requires the National banks in central re- 



134 CURRENCY LEGISLATION 

serve, and reserve cities, to hold actually a ten per cent, reserve 
in legal tender notes, or their equivalent in gold. It also pro- 
vides for an increase of the National bank note redemption 
fund, held at Washington, from five to ten per cent., and shows 
conservatism in limiting the total issue of the emergency cur- 
rency to the five hundred millions, although there is no prob- 
ability that this maximum amount will at any time be issued. 
It will be reassuring to the people everywhere, as well as to 
the banks, however, merely to know that so much is available, 
whether it is found necessary to use it or not. This confidence 
will prove a good national asset. 

Five hundred millions of National Bank Emergency Notes 
added to the circulation would for the time being involve enor- 
mous inflation, as the total amount of national bank notes out- 
standing on the first of this month was only $697,645,698. So 
it is more than enough for the purpose it is intended to serve. 

This new currency is subject to a retirement tax at the rate 
of five per cent, for the first two months, and to an additional 
tax of one per cent, a month thereafter till it reaches ten per 
cent. This rather heavy tax would be sure to cause the banks 
to present whatever they had of the emergency notes for re- 
demption as soon as it ceased to be profitable, that is as soon as 
they found they were unable to make loans at a higher rate of 
interest than they had to pay for the use of these notes. 

Therein lies a safety valve against permanent inflation of the 
currency as well as a needed element of elasticity. It is the 
best feature of the law after the currency provision itself, for it 
will virtually cause automatic action in checking redundancy 
through redemption. 

The self-interest of the banks cannot fail to make this tax, 
or interest charge, as effective in reducing the volume of this 
emergency currency when no longer required as the provision 
for its issue will be made effective when the necessity arises. 

As security for this new currency the Treasury will accept 
from the National banks, State, County and Municipal bonds, 
at ninety per cent, of their market value, and other bonds and 



THE EMERGENCY CURRENCY LAW 135 

commercial paper at seventy-five per cent, of their market 
value. But no bank can take out more than thirty per cent, 
of its capital and surplus in emergency currency when the se- 
curity it offers is commercial paper. These are proper safe- 
guards. 

Moreover, no bank that has not already taken out forty per 
cent, of its capital and surplus in ordinary national bank cir- 
culation is eligible to take out any emergency currency; and 
commercial paper will only be accepted as security from banks 
that associate themselves in groups of ten, with an aggregate 
capital and surplus of not less than five million dollars. Here 
the strength that comes from unity is required. 

The bill in providing for the Clearing House Currency Com- 
mittees now being formed requires them to be known as Na- 
tional Currency Associations, to carry out its provisions. It 
also, in authorizing the creation of the National Monetary Com- 
mission already referred to, required it to be composed of nine 
members of the Senate and nine of the House of Representa- 
tives. This commission is now at work, and shows earnestness 
and capacity. 

As in the multitude of counsellors there is wisdom, this Com- 
mission, composed of leading members of Congress, ought to 
bear good fruit in the form of a comprehensive financial meas- 
ure which will place our currency system on a sound and safe 
foundation. 

No financial measure was ever enacted without meeting with 
opposition, and this emergency bill was vigorously opposed by 
many New York banks and trust companies, mainly no doubt 
from motives of self-interest, as the new law will practically 
prevent them from getting the high rates, on call, from the 
Stock Exchange, that they have been able to charge in times 
of stringency heretofore. We have seen these high rates re- 
flected in their large dividends. 

While this new law will doubtless be ultimately superseded by 
the inclusion of its essential features in the comprehensive 
measure to be submitted to Congress by the National Monetary 



136 THE BUSINESS OUTLOOK 

Commission, it supplies, in the intervening time, all that is nec- 
essary to protect and fortify us against extreme stringency and 
panics. 

The section of the emergency law imposing an interest charge 
of one per cent, per annum on United States deposits may 
make it unprofitable, when money is cheap, for banks outside 
of the large cities to hold them, if they have to borrow United 
States bonds, to secure these, from the large city institutions, 
at the usual charge of one and a half per cent, per annum. 
Each bank, however, is left to paddle its own canoe. 

This would mulct them in a charge of two and a half per 
cent, per annum on Uncle Sam's deposits. But if the Treas- 
ury were willing to accept from them other bonds than those 
of the United States instead, as security, the difficulty would be 
solved. In a crisis, no doubt, other bonds would be accepted. 

The Government deposits in the banks now aggregate about 
a hundred and fifty millions, and the Treasury has recalled 
since the beginning of the year ninety-six millions, mainly to 
provide for the $42,667,000 deficit of the six months ending 
with June, and to increase the Treasury's working balance from 
four millions, which it touched at one time, to seventy-four 
millions, at which it recently stood. Here we have a striking 
contrast in size resulting from the ebb and flow. 

The large deficit was, of course, due to the great decrease 
in customs duties owing to the correspondingly reduced im- 
ports consequent on the hard times following the panic, and 
this deficit will only diminish as our imports increase. Recov- 
ery in our foreign trade may be slow until after this year's 
crops swell our export trade, but it will be sure, for we are 
a rapidly progressive nation. 

How bountiful these crops may be we may infer from the 
Government's last report on wheat, showing its condition on 
the first of June. The average condition of winter wheat was 
then 86 against 77—4 at the same date last year, while the 
condition of spring wheat was 95 against 88-7 last June. The 
acreage is considerably larger than it was last year, namely 
3% per cent., and the probable crop of winter wheat is esti- 



THE BUSINESS OUTLOOK 137 

mated at 440,315,000 bushels against 409,442,000 bushels last 
year, and that of spring wheat at 247,940,000 bushels against 
224,615,000 bushels in 1907. 

We have plenty of food for optimism in this. It reminds 
us of the greatness of our agricultural resources, and that 
agriculture is the backbone of our national prosperity. 

When I originally suggested an emergency law, of the kind 
we now have, I had in view its moral as well as its material 
effect, for sentiment is sometimes as powerful as fact in creat- 
ing or averting panic, and sentiment largely influences the stock 
market every day in the year, in favor of rising or falling 
prices. Moreover I felt it was necessary to prevent those 
spasms of stringency in the money market, which have occa- 
sionally caused call loans to be made at six per cent, per an- 
num one day and one hundred, or one hundred and fifty per 
cent., the next. 

These outrageously rapid and enormous fluctuations in the 
call rate for money on the New York Stock Exchange will be 
seen no more while this Emergency Currency Law is in opera- 
tion, and its essential features will no doubt be preserved in the 
comprehensive measure the present National Monetary Commis- 
sion will report to Congress next winter. 

As to the business outlook there is good cause for general 
encouragement. Crop prospects are unusually favorable in all 
sections, and bountiful harvests of wheat, corn, and the minor 
grain and other crops seem, from existing conditions, to be al- 
most assured. 

At the same time a larger area than usual is under cotton 
cultivation, and our metal mining activity is undiminished ex- 
cept for copper and iron ore, with the yield of the precious 
metals above the average. 

While business in many departments is still from twenty-five 
to forty per cent, below the normal point, some of the light 
industries have been comparatively little affected. 

But conditions in all are improving, although slowly. This 
improvement is more particularly noticeable in the Southwestern 
part of the country, of which St. Louis is the centre, than else- 



138 THE BUSINESS OUTLOOK 

where, for there the improvement has been very decided. In- 
cidentally this has shown itself in the " Sunshine " and " Pros- 
perity " movements in that section to stimulate trade, and they 
have created much enthusiasm. 

A conspicuously good sign is also seen in the resumption of 
part-time work in a number of New England mills that had 
been closed, and in the resumption of full-time work in mills 
that had been working on part time. This improvement is 
largely due to the accommodating spirit that labor has shown 
among the spindles in accepting a reduction of wages to con- 
form to the reduced profits of manufacturing. 

The reduction of certain steel prices, although not including 
steel rails, by the United States Steel Corporation, after so 
long holding out against any reduction, was a step in the right 
direction. It was none the less welcome to consumers because 
long deferred, for it will help in restoring activity in other 
industries. Improvement, like depression, is contagious, and 
the force of example is always strong. Thus the starting of 
one mill helps to start another, and prosperity spreads, just as 
the reverse is the case under opposite conditions. This is not 
the time to wear blue spectacles. 

The Fall River cotton mills have taken the lead in the march 
of improvement towards a better state of things, as nearly all 
of them were placed in full operation early this month of 
June, under the reduced scale of wages. The cost of producing 
goods has been reduced, by the wage reduction, about one cent 
a pound, if the machinery is run for a week, instead of three 
days, and the production of print cloth there is now only about 
one-ninth less than the normal output, and manufacturers are 
anticipating further improvement in prices. 

The agreement between Labor and Capital in this great hive 
of manufacturing industry is one of the best and most promis- 
ing signs of business recovery. 

The railways have been the greatest of all sufferers by the 
hard times, following the panic, as their reports of earnings 
and their idle cars abundantly testify. But their average loss 
of more than twenty per cent, in gross earnings has this spring 



THE BUSINESS OUTLOOK 139 

been largely neutralized by a very considerable saving, and in 
the case of Union Pacific and New York Central, by a large 
reduction, in operating expenses. 

Many of their dividends have, however, been reduced, or 
passed, as the recent instance of Missouri Pacific reminds us. 
But the indications are that the worst of the depression in 
railway traffic, as well as in business generally, has been seen. 
So we have good reason to take a cheerful view of the future. 

An encouraging straw is that on the 13th of May there were 
reported 404,375 idle cars in the United States, but on May 
27th their number had been reduced to 381,904. The dif- 
ference shows the direction in which the wind is now blowing. 

The prevailing disposition to look for and discount better 
times is reflected in the recovery of stocks and bonds that has 
taken place on the New York Stock Exchange, although the 
extreme abundance and cheapness of money have of course ma- 
terially helped their upward movement. They have been dis- 
counting better times. This condition of the money market 
has enabled us to export more than forty million dollars in 
gold to Europe this season. But as we imported a hundred 
millions immediately after the panic we could well afford to 
send that much of it back again without its having any effect 
whatever on our rate of interest for money, which is still under 
two per cent, on call in Wall Street, and often touches one and 
a quarter, and sometimes one per cent. But, of course, with 
the revival of activity in trade, it will advance under the in- 
creased demand for it. 

The old law of supply and demand always governs. 

We are fortunate in living in a land of liberty as well as 
progress. Our great American republic and its institutions are 
founded upon Liberty, and we are enjoying its fruits in the 
rights and privileges we possess as American citizens. But 
while prizing our liberty, and guarding it with that eternal 
vigilance which is its price, we must always be careful to guard 
against license, and bear in mind that Liberty is Freedom duly 
regulated by Law. 

The absolute need of such regulations in the great concerns 



liO THE MONEY POWER 

of our business life is obvious, but it should always be directed 
to the prevention of wrongdoing, without interfering with 
rightdoing, or checking legitimate enterprise in any way. 

Our banks, our trust companies, our insurance companies, 
our railways, our great industrial trusts, together with all our 
manufacturing, mining and trading corporations, should be reg- 
ulated by law for the protection of the people, and indeed for 
their own good. Holding them legally to a proper accountabil- 
ity prevents moral laxity on their part. 

These interests represent an amount of capital so immense 
that it is practically incalculable; and in connection with them 
we have the vast wealth of many individual capitalists and large 
financial and mercantile firms. These are capable of forming 
a money combination that may be powerful for either good or 
evil, according to the right or wrong direction of its forces. 

There is danger in the concentration of vast power, and 
enormous amounts of money, or its equivalent, in comparatively 
few hands, for who knows but what these might join hands in 
an unholy alliance to crush competitors and create panic so as 
to acquire railways, securities and other properties at panic 
prices at the expense of other people? 

A conspiracy to lock up money in Wall Street, for the pur- 
pose of creating a panic in the stock market, might be entered 
into by financial institutions and speculative multi-millionaires, 
and the result be disastrous to thousands, while it would add 
vastly to the wealth of those who engineered the disaster. 

We have sometimes, in the past, seen this done on a limited 
scale, by powerful bear interests in stocks, with very damaging 
results not merely to the bulls in Wall Street but to stockhold- 
ers generally. 

Now, however, the money power is so much more immense 
than it was, and so concentrated, that it is possible, by a com- 
bination of great financial forces, to do it on a large scale, 
with possible results as disastrous as those of 1907. 

Such a conspiracy should be guarded against and rendered 
as practically impossible as it ever could be by both Federal 
and State legislation prohibiting the officers of banks and 



UNSCRUPULOUS CAPITALISTS 141 

other financial institutions, under heavy penalties of fine and 
imprisonment, from participating in, or aiding and abetting, 
directly or indirectly, any doings of the kind. 

In our railway history, instances too numerous to mention 
have occurred where unscrupulous speculative capitalists have 
combined to force the foreclosure sale of railways that, but 
for their machinations, would have been able to remain solvent. 
They were, however, bent on the robbery of the innocent and 
defenceless bondholders and stockholders by forcing the roads 
into bankruptcy so that they could, at the foreclosure sale, 
themselves purchase, by a single bid, without a competing bid- 
der, a road with all its belongings, franchise and securities, for 
a nominal sum. This was generally about one-quarter of the 
actual cost of the property, and the minority interest, being 
scattered and weak, had no means to buy or protect it. They 
were the victims of a great wrong. 

Such robbery, under cover of the law, ought to be made 
impossible in the future, if later legislation has not already 
made it so; and no law that ensures justice and equity for the 
minority holders of railway property, and upholds their rights, 
should ever be allowed to become a dead letter. The poor must 
be protected as well as the rich. 

Vast fortunes have been made by trick and device in this 
and kindred ways, and our recent panic, that involved such 
widespread disaster to the country at large, quadrupled the 
wealth of some of our capitalists who sold stocks and bonds 
heavily at high prices just before the panic and bought as 
heavily at the bottom figures. 

These men, who profited so largely by the panic and the 
consequent rise in stocks, naturally did nothing to prevent or 
mitigate the panic. They secretly welcomed it as an engine 
of destruction to market values, and they were therefore public 
enemies. Some of them have a voice in the control of large 
banking institutions and large industrial corporations, and in 
their corporate capacity they might easily be as ready to test 
or abuse their money power as in their individual capacity, if it 
promised to double or treble or quadruple their wealth. 



142 THE MONEY POWER 

Appetite grows with what it feeds upon, and the eagerness 
of many of our rich men to become still richer is almost a 
craze. They fix their eyes on the Astors, the Vanderbilts, the 
Rockefellers and the Goulds, and point to Carnegie and to 
Frick and, among the dead, to Russell Sage and Marshall Field. 
They envy their richer brethren their great wealth, and some 
vie with and aim to equal if not surpass them in adding to their 
riches by hook or by crook. 

It is hardly an exaggeration to say that Mammon is their 
god, and money the Ultima Thule of all their efforts, desires 
and ambition. 

Is it too much to suppose that some of these men would be 
willing, when opportunity favored, to combine in using their 
wealth for purposes promising large gains for themselves but 
large losses for others? Would they allow their humanity, 
their sense of justice, their public spirit and their patriotism 
to stand in the way of their profits in a scheme of self-ag- 
grandizement involving evil consequences to the public ? I fear 
not. 

In any case, large aggregations of individual wealth and 
corporate capital, in a few hands, might easily become a men- 
ace to the financial and general business interests of the peo- 
ple, if not properly regulated by law. 

Capital in this country has rapidly accumulated in such im- 
mense masses as to be a great power for evil as well as good, 
and its possessors are not always conscientious and patriotic. 
Therefore they stand more in need of government control than 
the masses. Moreover, this money power is growing, and will 
continue to grow with the growth of the country; and it is 
already exerting, under the surface, great political power, and 
is boldly aiming, by concentration of its forces, at the control 
of the Presidency itself, and the policy of the Federal Gov- 
ernment. 

Congress has invested the President with such complete and 
comprehensive power over the national banks, the railways and 
industrial trusts that capital has the strongest of incentives to 
make, if possible, his policy coincide with its own views; and to 



ROOSEVELT AND TAFT 143 

accomplish this it is prepared to make any sacrifice and pay any 
price within its means. 

In this ambition and resolve we can see an element of grave 
danger to our cherished institutions and our republican form 
of government, for its object, concealed though it may be, is to 
place the Government of the United States practically under the 
control of a plutocratic oligarchy represented by the multi- 
millionaires and the banking, railway and industrial corpora- 
tions of the country. From this — " Good Lord, deliver us ! " 

In this connection, it is very significant that capital should 
have long been so warm towards Mr. Taft and so cold and 
hostile towards President Roosevelt. Wall Street has smiled 
approvingly on Mr. Taft, but frowned on Mr. Roosevelt be- 
cause of his policies; yet his policies are good and sound, and 
have laid bare and eliminated fraudulent practices in corporate 
management, particularly railway rebating, and raised the 
standard of our business morality. 

Yet why should this difference have existed when the one 
was the choice of the other, and was pledged to carry out his 
policies ? 

The secret of it lies largely in the differences of character 
and temperament between the two men. Nature has been lav- 
ish of her abundance to Mr. Taft in flesh, as well as in other 
respects, and we all know that easy-going and amiable jollity, 
equability of temper and good-humored patience are usually 
characteristic of those with plenty of adipose tissue, and the 
fatter they are the more this seems to be the case. It looks 
like one of the compensations of Nature. 

Therefore, although Mr. Taft has avowedly stood for Mr. 
Roosevelt's policies, he has been popular in Wall Street mainly 
because he was milder in manner and speech, and less im- 
petuous in denunciation than Mr. Roosevelt. 

Now, after the prolonged stress and exhausting ordeal of 
the panic, the financial community needs and craves rest and 
soothing treatment, and is inclined to resent whatever is ag- 
gressive. 

Consequently, while Mr. Roosevelt's great ability in execu- 



144 THE MONEY POWER 

tion is universally known and appreciated, Mr. Taft's suavity 
is no less appreciated, and better liked, at least under the ex- 
isting conditions. 

Mr. Roosevelt well knows, both as an orator and a writer, 
how to deliver sledge-hammer blows against abuses of power, 
while Mr. Taft has a natural aptitude for that soft answer 
that turneth away wrath, yet his firmness may be equal to Mr. 
Roosevelt's and his methods no less effective. 

We can well understand how the great extension of Federal 
power over the railways, except those confined to a single State, 
by the rate law, constantly tempts the capitalists who control 
these great arteries of traffic to strive for political power them- 
selves, so as to shape the Government to their own ends. The 
audacity and danger of this are not yet generally known or 
understood. 

It is not, however, to be assumed that if they gained their 
object in combination with the other great financial and in- 
dustrial interests of the country, they would be able, or even 
try, to revive former inequities of management, now prohibited 
by law; for rebating, discrimination, and other unlawful de- 
vices by which the railways dispensed favors to some and hard- 
ships and injustice to many have been abolished forever. 

At least, let us hope so, and I have no reason whatever to 
doubt that the reforming policies of President Roosevelt will 
continue to be a vital force for good, long after this generation 
of men has passed away. He is the great apostle of " the 
square deal," and his policies, being sound and just, will stand 
the test of time, and be sustained by the highest courts, which 
are above both Congress and the Presidency on all constitutional 
questions, and the protecting bulwarks against any invasion of 
the rights and liberties of the people. 

Hence, righteous reforms can never go backward, and Roose- 
velt's reforms are of the righteous kind. 

Mr. Gladstone, England's great commoner, once remarked 
to a friend of mine : " I understand you have a man in the 
United States who has a fortune of two hundred millions of 
dollars in marketable securities. That man's property should 



SOME ILL-GOTTEN GAINS 145 

be taken away from him to remove a great danger, not to your 
country only, but to other countries. Why, he could convert 
his property into money at an opportune period, and then with- 
draw the money from circulation, and cause a panic that would 
shake the whole world. It is too much power for any man to 
possess, and it should not be allowed." 

My friend rejoined: " But, Mr. Gladstone, you have a man 
in your country who is reputed to be equally rich." 

" I presume," he replied, " that you refer to our richest peer, 
the Duke of Westminster. But there is no danger in his prop- 
erty holdings, as it is in real estate, which is not convertible 
into money, because it is entailed, and therefore cannot be 
sold." 

It is beyond question that much of the severity of our last 
panic was due to the efforts of the speculative capitalists (to 
whom I have referred), to intensify disturbing conditions and 
hammer the stock market to lower and lower depths, in order 
that they might buy back at prices as low as possible the stocks 
and bonds they had sold short, in addition to those they had 
actually held. How enormous their profits were may be easdy 
imagined. 

In this hammering of the market tactics were employed that 
would not bear the light. False rumors of various kinds were 
industriously circulated from day to day, particularly of im- 
pending failures of financial institutions, large industrial cor- 
porations and important Wall Street firms. These served their 
intended purpose by increasing distrust and the pressure to 
sell stocks, so accelerating the decline in prices. 

It would have been righteous retribution if the authors and 
disseminators of these scandalous falsehoods had been detected 
and punished by imprisonment. But detection and proof in 
such cases are unfortunately so very difficult as to be almost im- 
possible, although under our criminal laws they are indictable 
and punishable as misdemeanors. 

Any person who utters a false statement against a financial 
institution or firm that is in any way hurtful to its credit is a 
criminal slanderer, and should be indicted, tried and convicted. 



146 THE MONEY POWER 

as it is very justly held to be a criminal offence. From such 
a source fires are kindled that have often burst into raging 
flames and produced Wall Street panics; and many an upright, 
honest and deserving business man has been crippled by a stab 
in the back from which he was powerless to protect himself be- 
cause the attack was made in the dark. 

What is needed is a stricter enforcement of the law, and, 
to accomplish this, more public spirit among those able to fur- 
nish proof of these nefarious slanders, which are generally cir- 
culated for the double object of gratifying malice and gaining 
profit. They should, as good citizens, possess enough public 
spirit to make them willing to testify in a court of law against 
offenders. 

The people are the greatest sufferers by panics, and they 
should be protected by stringent laws, vigorously enforced 
against the depredations and slanders of those seeking to in- 
tensify them. Profits so made are indeed ill-gotten gains, and 
represent the worst kind of tainted money. It too often hap- 
pens that the rich are made richer just as the poor are made 
poorer, by panics. 

But now that the panic of 1907 is a thing of the past, while 
a brightening future lies before us, let us hope that we shall 
never see its like again, and that our former prosperity will 
be not only speedily restored but surpassed. With our bound- 
less resources, and not far from 85 millions of enlightened peo- 
ple, no other nation on earth has a destiny so assuredly great 
and grand as the United States of America, and all our setbacks 
can be only temporary. Already we see the rising sun ! 



A REVIEW OF FINANCIAL AND TRADE CON- 
DITIONS 

Address delivered at the Sixth Annual Convention, American Insti- 
tute of Banking (Associated Chapters) at Providence, R. I., July 24, 
1908. 

WE are now hopefully waiting for the dawn of a new 
era in our history. In actual business conditions the 
improvement, since the panic, while general, is slow 
and somewhat unevenly distributed, so that trade reports are 
more or less divergent and conflicting, according to locality 
and environment; and there are complaints among New Eng- 
land mill owners, and elsewhere, that the recovery is more spas- 
modic than steady. 

It is safe to say, however, that the industrial improvement 
which was shown at the beginning of June in the reopening 
of some of the New England cotton mills, and the resumption 
of full work by others, as well as by the increased demand for 
their products in the Middle Western States, has been main- 
tained. But it has not increased and equaled the sanguine ex- 
pectations of those who looked for steady and quick recovery. 
So they are disappointed, and talk blue, and many of them 
look as blue as they talk. 

A few of them seem to be dyed with indigo, and you know 
how blue indigo is. I recommend a dye of another color, some- 
thing brighter and more cheerful, and less expressive of Bun- 
yan's " Slough of Despond," or the Scriptural " Book of Lam- 
entations." I know of nothing more depressing than a walking 
picture of calamity in indigo blue. 

I would really prefer to see the Devil on two sticks, if there 
is such a person. But it is sometimes hard to be cheerful, so 
we must make allowances for gloom, and set a good example 
147 



148 FINANCIAL AND 

by looking cheerful ourselves. That is within the reach of all, 
even in hard times, for, like politeness, it costs nothing. More- 
over, it seems to be the great St. Louis " Sunshine " remedy ! 

Turning to securities, we can hardly expect much from the 
stock market, between now and the election, that is not influ- 
enced by the political situation, and the shrewdest judges of 
this are likely to be among those who are right on the market, 
so much are political and financial interests interlaced in this 
campaign. Hence, more than the usual number of political 
scares may be expected for use on the stock exchange, but 
they will quickly fall flat, and do little harm. 

That recovery in the general trade of the country is slow 
is shown by the still increasing amount of idle money that is 
being sent to the New York banks and trust companies by the 
banks elsewhere, in order to earn the one and a half, or two, 
per cent, interest which the New Yorkers pay on the balances 
of their country bank depositors. 

Consequently the deposits of the banks and trust companies 
of New York city had, on June the 20th, risen to a total of $2,- 
083,659,900. Of this amount, $1,327,336,400 was held by the 
•Clearing House banks, against which they had a legal tender 
reserve of 29-87 per cent., or $63,525,300 above the twenty- 
five per cent, requirement. In the following week the total 
deposits further increased $15,678,700. 

The indications are that this drain of money to New York will 
continue until near the time for the usual movement of money 
to the West to move the grain crops, and, later, to the South 
to move the cotton crop. Then the movement will doubtless be 
reversed, but not on the scale of recent years, as the Western 
and Southern banks have retained in their own vaults much 
more currency than usual, owing to their experience of 1907- 
They have been extra-cautious, and put safety before profit. 
There is nothing to be said against this. We all know that a 
burned child dreads the fire. 

It is noteworthy, however, that the currency drain to New 
York has increased since the passage of the Emergency Cur- 
rency Law. This is a sure sign that the inland banks are now 



TRADE CONDITIONS 



149 



gaining confidence in their ability to replace, when needed, any 
currency they may send away. The new law is therefore al- 
ready exerting a good effect in the banking world. 

How far the panic of 1907, and its natural consequences, 
will influence the popular vote in the Presidential election in 
November cannot now be foretold, but that it will have con- 
siderable effect we may infer from past experience. Wall 
Street is harping much on this string, and it will continue to 
harp upon it till the die is cast by the people at the ballot box. 
Meanwhile it is certain to be an active and aggressive specu- 
lative factor in the stock market, and the war of words between 
Taft and Bryan, and their supporters, on the stump, will absorb 
public attention, and tend to restrict the revival of business. 
Moreover, the platform of each party pledges it very decidedly 
to immediate tariff revision — that of the Republicans calling 
for a special session after the inauguration of the new Presi- 
dent. This, too, will exert a restraining influence. It will do 
so not only because of the uncertainty of the result of the elec- 
tion, but uncertainty as to subsequent tariff legislation; and, 
however sure we may feel that Taft will be elected by a large 
majority, we must bear in mind that there are others that feel 
the other way, and that there is nothing certain in politics, any 
more than in the stock market; and we know how uncertain 
that is. 

Whether Taft is elected or not, tariff reform will have to 
be reckoned with in all our industries; and importers and man- 
ufacturers fear it because they can never foresee how far it will 
go. That the coming fight over the tariff will be long and 
bitter is, however, easily foreseen. 

It is a tradition that the political party in power at the time 
of a panic suffers by it through having to bear the blame of 
the disaster. We can all remember the abuse that was show- 
ered upon President Cleveland during, and after, the panic of 
1893, and how severely the Republican platform of 1896 held 
him and his party responsible for it. 

At the previous Presidential election in 1876 trade depres- 
sion reversed majorities; and, going back to the effect of the 



150 FINANCIAL AND 

panic of 1857, it certainly helped to turn out the Democrats, 
and to elect Lincoln in I860. 

But the platform of this year's Republican Convention, while 
mentioning the panic of last year, denies that it has been fol- 
lowed by hard times, and says that if the Democrats had been 
in power it would have been a great and lasting disaster, 
whereas now the country can rely on continued and complete 
recovery. This is indeed a cheerful and rosy view. 

There is no doubt, however, that the great prosperity of 
previous years had enabled large numbers of the laboring peo- 
ple to lay up money which has served them well since the 
panic, and so mitigated its effects. But known industrial con- 
ditions involve a good deal of poverty and suffering among the 
great majority of wage-earners. We must therefore expect 
manufacturing centres to reflect in the November vote the ef- 
fect of the panic. But in the West the agricultural vote will be 
little affected by it, as it was hardly felt by the farming com- 
munity, which for eight consecutive years had enjoyed unprec- 
edented prosperity. 

New Yorkers who recently went to the Convention. and did 
some traveling in Kansas during their trip had their eyes opened 
to the conditions prevailing in that section of our country. 
They report the farmers as almost all having automobiles to 
go to market in, thus showing their affluent condition — and 
why not? They have had those eventful eight years of boun- 
tiful crops, which they have sold at high prices, so that the 
strongest back-log that this country has to-day against a con- 
tinuation of panicky or depressed conditions is the wealth of 
our farmers, who represent 35 per cent, of the labor class of 
the nation. 

The corn crop this year, from the present outlook, will yield 
2,700,000,000 bushels, which, at the September option price 
(62 cents), is valued at $1,700,000,000. The wheat crop, with 
an indicated yield of 675,000,000 bushels, at 93 cents per 
bushel, amounts to $627,000,000. Thirteen million bales of 
cotton, which looks likely to be this season's yield, at 9l/ 2 cents 
(the present price) would amount to $600,000,000. The oats 



TRADE CONDITIONS 151 

and hay crops, now out of danger, are record-breakers in quan- 
tity and quality. While the combination of crops this year will 
perhaps not be the largest in quantity, the price that will prob- 
ably be obtained for them will aggregate, it is estimated, $8,- 
000,000,000 — the largest sum ever received in any one year 
by this or any other country since humanity came into ex- 
istence with the creation of Adam. It is a curious fact that 
during the period when the people of the East, owing to the 
disastrous effects of the 1907 panic, were putting their automo- 
biles out of commission or selling them at reduced prices, the 
farmers of the West were accumulating them, and at the pres- 
ent time are the most numerous buyers. 

The 6,778 national banks in the United States in their 
reports to the Comptroller of the Currency on May 14th showed 
that they held eight hundred and sixty-one millions of cash, 
an amount far greater than they ever before held, and 169 
millions greater than at the same date last year. Half of this 
large increase was in the forty-six national banks of New 
York, and, in the distribution of the rest, those of the West 
and Middle West were the principal gainers. 

Meanwhile loans were largely reduced all over the country, 
excepting New York City, the greatest shrinkage being in the 
Western and Northern banks, and a like movement was shown 
in their deposits. 

While speaking of bank deposits, I will incidently say that 
the suggestion which has been made that there should be a 
guarantee of these by the Federal Government is inconsistent 
with sound banking and good government, and therefore an 
absurd proposition. 

If bank deposits are to be insured, the insurance should 
and must be by the banks collectively. This object could 
be accomplished by all the Clearing House banks in any city, 
or in all the cities of the United States, forming an insurance 
fund by the payment of a small tax. 

A trifling tax upon each bank would be sufficient for this 
purpose, as the statistics of the national banks show that the 
average net losses to depositors of those that have failed, since 



152 THE EMERGENCY CURRENCY LAW 

they were first organized, have been remarkably small. The 
banks need no Government assistance in this matter. It is 
their own affair, and it involves little risk to themselves as 
insurers. So they will do well to combine and insure each 
other's deposits as a mutual benefit society. 

The effects of the panic of 1907 on Uncle Sam's income 
reflect general conditions by a reduction of not far from 
sixty million dollars in the fiscal year ending June SO. This 
has been exceeded only twice in any year since the Civil War, 
and was mostly due to the falling off in customs receipts 
consequent upon reduced imports. These were $46,000,000 
less than in the previous year. Economy, enforced or vol- 
untary, succeeded extravagance, and diamonds, and other 
superfluous luxuries of the rich and well-to-do, were no longer 
wanted, generally because there was no money to pay for 
them. 

Yet our customs duties for the year amounted to 287 nail- 
lions notwithstanding, the third highest in the country's his- 
tory, against 333 millions the previous year, the largest total 
ever reached. The year's internal revenue receipts, however, 
shrank only 20 millions, leaving the total 250 millions. So 
Uncle Sam's wallet is still bulging with his wealth, while he 
can point to resources greater than those of any other nation. 

He can also congratulate the country on the enactment of 
the Emergency Currency Bill, which fortifies us against future 
panics. In conformity with this law, every clearing house in 
the United States is following the example of New York by 
organizing a National Currency Association, so as to be pre- 
pared to act under it without delay at any time, if the necessity 
for so doing should arise. But the mere fact that we are 
prepared to check a panic through supplying the sinews of 
war to a maximum amount of five hundred millions will, of itself, 
tend to prevent a panic, if not to make one practically impos- 
sible. 

As we are now armed against it in advance, this inspires 
confidence, and where there is confidence there cannot be panic. 

The Treasury Department is earnestly co-operating with the 



THE EMERGENCY CURRENCY LAW 153 

National banks in preparing for the issue of the Emergency 
Currency, and, for the purpose of facilitating this, it has di- 
vided the United States into six groups, or sections, to each of 
which a certain definite allotment has been made, in accordance 
with their estimated needs in the event of panic. 

To the Eastern States, namely, New York, New Jersey, 
Pennsylvania, Delaware, Maryland and the District of Colum- 
bia, forming the first section, $207,300,000 of the new National 
bank notes are allotted ; and to the New England States, Maine, 
New Hampshire, Vermont, Massachusetts, Rhode Island and 
Connecticut, $55,000,000. 

To the Southern States, Virginia, West Virginia, North and 
South Carolina, Georgia, Florida, Alabama, Mississippi, Louis- 
iana, Texas, Arkansas, Kentucky and Tennessee, $65,700,000 
are allotted; and to the Middle Western States, Ohio, Indiana, 
Illinois, Michigan, Wisconsin, Minnesota, Iowa and Missouri, 
$119,420,000. 

To the Western States, North and South Dakota, Nebraska, 
Kansas, Montana, Wyoming, Colorado, New Mexico and Okla- 
homa, $28,260,000 are allotted; and to the Pacific States, Wash- 
ington, Oregon, California, Idaho, Utah, Nevada, Arizona and 
Alaska, $24,120,000; while our Insular Possessions are thrown 
a bone in the shape of $200,000. 

This allotment system aims at a rapid, scientific and efficient 
distribution of the Emergency Currency when, if ever, the time 
comes for it, and it ought to act like clock work, and respond 
promptly to all calls, from one end of our vast national domain 
to the other. 

With the Federal Government and all the National banks 
banded together against it, under this law, a panic ought not 
to have the ghost of a chance to show itself, or, at least, it 
ought to be nipped in the bud. 

Yet it is avowedly only a temporary measure, its limitation 
being six years; and it is not meant to be a comprehensive one. 

It indeed provides for the National Monetary Commission, 
composed of an equal number of Senators and Representatives 
of the United States, which is now engaged in preparing to 



154 MONETARY REFORM 

report to Congress whatever it may, after due investigation 
and deliberation, consider best for the nation's monetary needs. 

In such a bill as it may agree upon will, no doubt, be in- 
cluded the Emergency Currency feature of the present law. 
It is to be expected that this costly, and presumably competent, 
National Monetary Commission will do its work well, and 
remedy the defects of our existing system including the elim- 
ination of that stumbling block in finance, the Sub-Treasury 
system, which locks up vast sums of money that should be in the 
banks to meet the requirements of business. 

This money can only be released in times of stress by the 
Secretary of the Treasury unduly stretching his authority, and 
making experiments in financial surgery. 

The emergency measure is simply to bridge over until a 
permanent one is adopted by Congress, and it should be scien- 
tific, sound and flexible so as to last without modification for a 
century at least. Then our financial system will not only 
command the confidence of our own people but that of all other 
nations besides. 

The FIRST essential is that the banks be allowed to issue 
currency; thoroughly safeguarded by Federal regulation and 
supervision. 

The SECOND essential is a currency system that will 
readily expand and contract, according to fluctuations in de- 
mand arising from the ever-changing conditions of finance and 
commerce. 

The first step involves taking the Government out of the 
banking business; for there is no country in the world where 
the money market is so completely under the uncertain dis- 
cretion of a Government official as in the United States — 
obviously a situation that is un-American and requires correc- 
tion. 

The second step calls for methods and regulations which 
have stood the test of experience elsewhere, and have been 
accepted by the best banking and currency authorities in the 
world. These should be based upon the following well estab- 
lished principles. 



MONETARY REFORM 155 

(1) Currency issues should not exceed the paid-up capital 
of the bank. 

(2) Currency issues should be a first lien upon the assets 
of the bank; also a first claim upon stockholders to the full 
extent of their holdings. This is ample security; but, if 
more is required to satisfy public opinion, the small tax upon 
each bank would quickly provide an insurance fund that would 
make the security of all notes still more certain. 

(3) Notes should be issued only after securing permission 
of the Comptroller of the Currency. 

(4) Several redemption agencies would be necessary, 
placed in different parts of the country, and selected by the 
Comptroller, in order that banks might return notes promptly 
for redemption in case of redundancy. Quick redemption, or 
payment on demand, is one of the most important elements 
of any banking currency; since on this quality depends, not 
only its effectiveness, but also its safety and command of pub- 
lic confidence. 

Under a system of this kind, currency would of course ex- 
pand when demand increased and interest rates advanced; con- 
versely, it would shrink when demand and interest rates de- 
clined; thus acting automatically, smoothly and independently 
of any Government official opinion, which might easily be at 
variance with the requirements of actual conditions. 

A number of minor regulations would also be necessary, such 
as providing for cost of operating the system, and the protec- 
tion of notes of suspended banks by a small tax upon cur- 
rency issues. Each bank, for instance, should be obliged 
to deposit with the redemption agency of its district legal 
money to the extent of not less than 5 per cent, of its outstand- 
ing circulation; this for the redemption of any of its notes 
sent in. Certain regulations would also be required as to 
reports, and the redemption of bank notes in legal money of 
the United States. Other regulations might also be found 
necessary, but the above are the prime essentials to a perfectly 
safe banking asset or credit currency system. 

Our present currency system is a clumsy and rigid affair, 



156 MONETARY REFORM 

working entirely without regard to actual requirements. For 
example, to-day our currency is increasing at a time of business 
depression when the supply of money is greater than needed, 
and would under modern methods be contracting. As a result, 
we are threatened with a period of inflation in values; which 
though temporarily pleasing will in the long run delay rather 
than accelerate a sound recovery in business. 

No civilized country in the world is so far behind in mon- 
etary reform as the United States. Across the border, in 
Canada, where business conditions are quite similar to our 
own, an elastic banking currency has been working for years 
so quietly, so smoothly, so efficiently, so free from losses, that 
it has actually been overlooked; or at least has not received 
the attention it deserved. Panics come, and panics go in Can- 
ada, but without the violent disturbances in money and in- 
terest rates which are so painfully familiar in the United 
States. 

The passage of our Currency Bill was all very well, since it 
will avoid an early repetition of the extremes witnessed last 
October. But its real value will be to give the country oppor- 
tunity and time to work out a true, scientific solution of our 
currency problem. We must have a system adapted to the 
needs of the country, and in line with the best thought and 
experience of the day. Our national banks have served their 
original purpose of providing the sinews of war, but condi- 
tions have vastly changed, and we can afford no longer to 
depend upon an antiquated system. Our currency is now 
based upon bonds or debt, which in due course of time must 
be redeemed. It is unavoidably dependent upon a rigid base, 
and the demand for currency simply advances the price of 
bonds, and makes the system more and more rigid. As these 
obligations become due, the rigidity and ineffectiveness of our 
present system will become more and more apparent. Our 
credit abroad will never occupy the high position to which it is 
now entitled until we establish our currency upon a basis that 
commands confidence and respect, in place of distrust and 
derision, among the civilized nations of the world. There is 



TRADE CONDITIONS 157 

no question to-day of more far reaching importance to our 
business men than the Currency Problem; albeit the fact is not 
generally recognized. 

The readjustment of railway wages to the altered business 
situation has, for the time being at least, ceased to be the 
urgent question that it was, owing to its voluntary postpone- 
ment by the railways themselves. The Southern Railway led 
in this direction by announcing that it would delay a decision 
in the matter for at least three months, that is, until the first of 
October. This course was prompted by the expectation that 
increased freight traffic could hardly be deferred much longer, 
in view of the crop prospects and the nearness of harvest time. 
It was argued, too, that should the crops prove equal to present 
indications, general business might be sufficiently stimulated to 
dispense with any necessity for a reduction of wages. 

This embodies a hopeful view of the future, of no little sig- 
nificance, and it was emphasized by the confidence in further 
improvement expressed by J. P. Morgan on his recent departure 
for Europe. " The future," said he, " looks very bright in- 
deed." 

Then, the Illinois Central Railway on the first of July re- 
stored the shops of its system in four States to full time. 

I do not, however, believe in the efficacy of unusual forcing 
processes for promoting recovery in trade. To be safe and 
sure we should make haste slowly. The almost magical changes 
looked for by the Prosperity League of St. Louis are impossi- 
ble on a sound basis, and soundness is necessary to confidence. 
A soda-water rise in anything, resulting from a premature 
steaming process, or bull movement, would do us more harm 
than good, because it would invite a reaction. 

Spiritualism in, or out of, business, has of course no solid 
foundation. It is too much a thing of imagination, and sug- 
gests the man who tried to pull himself up by his bootstraps. 
His efforts ended in disappointment. But I advocate and urge 
courage, hopefulness, resolution, patience and push, and mak- 
ing the best of opportunities. 

This artificial " Business Men's Prosperity Movement " had 



Y58 TRADE CONDITIONS 

an extensive organization, which sent out, among many other 
manifestoes, hundreds of thousands of circulars fixing the first 
of June last for the full resumption of business and the re- 
employment of all who had been " laid off " or discharged. 
Many belonging to it, carried away by their enthusiasm in the 
cause, took their own medicine, that is, acted on their own 
advice, and on " Re-employment Day " laid in stocks of goods 
and re-employed all their old hands. The result was disap- 
pointment, and in a few instances disaster. They are said to 
have all lost money, and some of them were unable to pay for 
their labor and materials, and " went broke," as the phrase 
goes. Business did not come to them. 

It was then blazoned as " The Sunshine Movement," but, 
with all respect for the good intentions of its promoters, I think 
Moonshine would have been a more appropriate name. A cer- 
tain place is said to be paved with good intentions that failed 
of their purpose; and there is a great deal of misdirected en- 
ergy and mistaken judgment in the world. 

This is a sternly matter-of-fact, competitive and progressive 
age, with fierce rivalries, and there is no place for romance in 
our business life, or for chimerical experiments foredoomed to 
prove abortive. 

This Prosperity League avowedly sought to accomplish five 
purposes by the force of sentiment, namely, to keep the dinner 
pail full; to keep the pay car going; to keep the factory busy; 
to keep the workmen employed; and to keep wages up. But 
they might as well have tried to run a steam engine without 
fuel. The first of June, " Re-employment Day," having 
proved a fiasco, the League named the first of July as a new 
one, with similar results. So it seems to have the courage 
of its convictions. 

In connection with the gradual decrease in the number of 
idle cars, it is both interesting and gratifying to note that the 
rate of decrease in the gross earnings of the railways is now 
diminishing in comparison with the returns for the previous 
five months. This, in conjunction with their large reduction 
jn operating expenses, enables the railways to withstand, ad- 



TRADE CONDITIONS 159 

versity and hold their own better than was anticipated until re- 
cently. 

But the railways have had a very hard row to hoe since last 
October. It is therefore of prime importance to them, for 
the time being, that they have at length been able to prevent 
their net earnings from declining in the same proportion as 
their gross earnings. This, however, has its obvious drawbacks, 
and can only serve as a temporary expedient, for it involves 
the employment of fewer men than usual in the workshops and 
on the trains, and the deferring of repairs and the replenish- 
ment of supplies and equipment. 

This not only causes general deterioration of roadbed and 
rolling stock, calling, later on, for extra expenditure, but it 
tends to the impoverishment of other industries, particularly 
those manufacturing steel rails, locomotives, cars and other 
railway equipment. 

That under these circumstances the railways should have 
practically joined their employees in the effort to keep up 
wages, after trying hard to reduce them, shows how strong the 
labor unions are, and how useless the railways consider it to 
fight against them under existing circumstances, or at least how 
reluctant they are to antagonize Labor to the extent of produc- 
ing an open conflict. They are, however, now making a strong 
effort to advance freight rates, led by the New York Central, 
which has applied to the Interstate Commerce Commission to 
sanction the rise. 

Yet wages ought to be reduced to conform to the decline in 
commodities, and reduced profits. Organized labor still re- 
mains as well paid as it ever was. Its wages were jackscrewed 
up by the trade unions in the days of our booming prosperity, 
and now the unions refuse to reduce them, and back up their 
refusal by appeals to Congress, conventions and all other polit- 
ical forces. Average wages have been increased from one- 
third to fifty per cent, in fifteen years, while the cost of all 
kinds of materials used by the railways has increased from 
fifty to one hundred per cent. Hence the cry of the railways 
for higher freight rates, or lower wages. 



160 REDUCED DIVIDENDS 

But exceptions to this despotic union rule have, I am glad to 
say, been made among the cotton and woolen mills of New 
England, where labor has very sensibly met capital half way, 
with the happy result of starting many textile and kindred 
factories that had been closed, and causing others to work 
on full instead of part time. 

The sore straits of many of the railways, and the serious 
impoverishment of all, since the panic, and the severity of the 
ordeal they are passing through, are not yet fully known to 
the general public. Apart from the railways that have passed 
into receiverships, six have already passed their dividends, 
while twice as many have reduced them. Dividends were 
passed on Erie first and second preferred stock, Southern Rail- 
way preferred, Missouri Pacific, Lake Erie & Western pre- 
ferred, Detroit United, Big Four common stock, Inter-Met, 
preferred, Metropolitan Street Railway and Cripple Creek com- 
mon and preferred. 

Annual dividends were reduced on New York Central stock 
from six to five per cent.; on Pennsylvania from seven to six; 
on its Pennsylvania Co. from eight to six; on Atchison from 
six to five; on Norfolk & Western from five to four; on West 
Jersey & Seashore from six to four; on the Atlantic Coast Line 
from six to five; on Mobile & Ohio from five to three; on 
Louisville & Nashville from six to five, and on its Nashville, 
Chattanooga & St. Louis from six to five. Pacific Coast also 
dropped from six to four per cent. The Baltimore & Ohio, 
it was generally believed, would be added to this list of reduc- 
tions, as its net earnings in May were $1,373,159 less than in 
May last year, after showing a decrease of $1,334,185 in April, 
making a total decrease of $7,007,070 in net for the 11 months 
of the fiscal year ending with May. I quote these earnings 
because they are typical of those of many other railways. Yet, 
despite the acknowledged fact that $1,300,000 of the regular 
3 per cent, semi-annual dividend had not been earned in the 
first half of 1908, it was declared. But this mortgaging of the 
future is bad policy. 

The recent death of ex-President Cleveland, with whom I 



GROVER CLEVELAND — A DIGRESSION 161 

had the pleasure of a long and intimate acquaintance, was a 
memorable event which naturally associates itself with a review 
of current affairs. It evoked, very justly, tributes of respect 
and warm appreciation from all parties and the whole nation, 
and President Roosevelt delivered a eulogy over his grave. 
Yet, apart from his connection with Princeton University and 
his Equitable Life trusteeship, as he had long before retired 
into private life, his death had no material influence on either 
the Wall Street or any other markets, except, for a day or two, 
to indirectly curtail transactions. But all the stock and com- 
modity exchanges in the country honored his memory by clos- 
ing two hours earlier than usual on the day of his funeral, and 
flags were half-masted everywhere between the two oceans, 
while the press unanimously praised him most highly and un- 
grudgingly. 

The influence exerted by Mr. Cleveland on the government 
and people of the United States, during his two terms as Pres- 
ident, I need hardly say, will be lasting. He will be long re- 
membered for the resolute part he took in the fight for sound 
money, and against the silver heresy, not for the benefit of his 
party, or any party or section, but for the whole country and 
the whole people, with equal regard for the interests of debtors 
and creditors, and both Labor and Capital. He did this, too, 
in the face of tremendous political opposition to honest money, 
which was all the harder to resist because it came from his 
own party, while the Republicans were indifferent and even 
covertly hostile, fearing it might prove a menace to the shrine 
of Protection, at which they bowed and bent the knee in rev- 
erence. 

He was assailed by volleys of abuse and misrepresentation 
both in and out of Congress, and denounced as a traitor to the 
Democratic party because he refused to countenance the " cheap 
money " that the Democrats were clamoring for. But in his 
quarrel with his party he was as insensible and unresponsive 
to their pleadings as to their denunciations, and adhered firmly 
to what he knew to be right and just, true to his own convic- 
tions. So he triumphed in the end over all his adversaries, 



162 GROVER CLEVELAND — A DIGRESSION 

and his triumph was the triumph of sound money. He illus- 
trated anew the aphorism that 

"Thrice is he armed who hath his quarrel just." 

Equally praiseworthy was his action in 1895 in selling 
United States bonds for gold to the Morgan-Belmont Syndi- 
cate to avert a suspension of gold payments by the Treasury, 
and his resolute adherence to the merit system in the Civil 
Service of the Government. In this he acted, without fear or 
favor, under the provisions of the Civil Service law which 
had been passed while a Republican President, Chester A. Ar- 
thur, was in office. The principle involved was then new to 
the Administration, and contrary to the views of politicians 
seeking the spoils of office, especially those of President Cleve- 
land's party, who at that time were particularly hungry for of- 
fice, for the Democrats had been out of power since the 4th 
of March, 1861, when President Buchanan's term ended and 
Lincoln's commenced. There was groaning and gnashing of 
teeth, and even some weeping and wailing. 

But Mr. Cleveland was no respecter of persons, or party, 
where right and duty were involved. He was a Democrat, but 
he treated Republicans and Democrats with equal impartiality. 
His sworn duty was to obey the law, and he obeyed it by the 
establishment of the Civil Service rules on a firm and perma- 
nent basis, much to the disgust of very many of his party, 
who argued that political claims should take precedence of 
mere merit. He turned a deaf ear to them, and they reviled 
him. 

As a matter of history, however, the Venezuela Message will 
always stand out as the most prominent event in President 
Cleveland's career; and, bitterly as he was denounced for it 
as an act of indiscretion, there is no doubt it was prompted 
by his true American spirit and a high sense of justice. 

It was, however, an aggressive and defiant declaration, with- 
out precedent in international political history. It was a bold 
fling at the foremost of nations that astonished the world, but 
it was a defence of weak South American governments, and 



THE TARIFF QUESTION 163 

a cry of " Halt! " to England in her controversy with Venez- 
uela. 

The United States was made to stand between the two an- 
tagonists, and the greater was not permitted to sit in judgment 
on the smaller, nor yet to fight, but to arbitrate. If fight there 
must be, then it would be between England and the United 
States. Such was the inference to be drawn. But the good 
sense and moderation of both nations led, much to their credit, 
to a peaceful solution of the difficulty, and the threatened bom- 
bardment of Venezuela by the British was averted. This of 
itself was a distinct gain in the direction of international peace. 

Yet for only one thing did I ever see good reason to criticise 
President Cleveland, and that was for this Venezuelan Message 
to Congress. High as his motives were, he needlessly gave 
England a slap in the face, and caused a panic in Wall Street, 
which had disastrous results. But I regarded it as nothing 
more than an error of judgment, an inconsiderate act; and I 
rejoiced, as an American citizen, when the amicable settlement 
of the matter repaired the breach and restored good feeling 
between England and the United States. 

This good feeling has never been interrupted since that time, 
but has gradually developed into a warmer friendship than the 
two nations ever shared before. Let us hope that the fraternal 
ties between the two great sections of the Anglo-Saxon race 
will never be broken, or even weakened, however great their 
rivalry for position, in the trade and commerce of the Orient, 
and the rest of the world. 

I referred to Protection, and I will refer to it again. It has 
been the cornerstone in the Republican temple, which Repub- 
licans regarded as the foundation of their faith, and almost 
too sacred to be touched. But, in my opinion, and also in the 
opinion of very many good Republicans, the time has come 
when we should no longer stand in awe of the tariff and in 
fear of making any changes in it. 

I am one of those who believe that the best interests of this 
country demand that the tariff should be simplified, and grad- 
ually lowered, say one schedule at a time, with six months' 



164 TRADE CONDITIONS 

notice of any important change in it. This would enable im- 
porters to protect themselves sufficiently to avoid loss on their 
previous importations. 

A reduction of customs duties on commodities, and articles 
of general consumption, would obviously reduce the living ex- 
penses of the people, which are now so great as to be the 
chief source of the discontent of labor, and labor's aversion and 
refusal to accept a reduction of wages to correspond with the 
general situation. 

Moreover, we have now so much protection that, in many 
instances, it ceases to protect through fostering excessive com- 
petition at home. 

This tariff question is a nut that Congress will have to crack 
after the next President takes office, on the 4th of March, 
1909. As both the Taft and Bryan platforms make Tariff 
Reform their watchword, it will become the leading political 
issue. But let us avoid radical changes in the tariff, by all 
means. 

In the present stage of the country's recuperation from panic, 
disappointment here and there must be expected. We have 
reason to be thankful that it is not everywhere. People are 
disappointed because the cotton, the iron and the steel mills 
are not running steadily at full time, and also because the 
sales of merchandise in these industries still average only a 
little above fifty per cent, of the normal ante-panic sales in 
1907. But then there was great overtrading, especially in 
the dry goods trade, and hence the severity of the reaction in 
it this year. Yet there has been one positive advance, from 
which no recession is reported. The fractional rise in dry 
goods since March is maintained. Although the recovery is 
small in comparison with the previous decline, it indicates a 
tendency to further betterment, and Marshall Field & Co., of 
Chicago, in their trade circular say they believe the lowest 
prices have been seen, and that steady improvement is to be 
looked for. They have hitherto always proved to be correct 
in their prognostications. 

On the other side of the picture, however, we have the ten 



TRADE CONDITIONS 165 

per cent. June cut in steel, with the exception of rails. This 
metal the United States Steel Corporation had previously held 
artificially firm by the sheer force of capital. The cut ought 
to have been made sooner, so as to stimulate demand, and, in 
turn, help other industries; but better late than never. It has 
imparted an improving tone and some little life to the steel 
trade, which is now up to 55 per cent, of a fair average. 
Every one saw that it was a step in the right direction, a 
proper though dilatory concession to the times. The very op- 
timistic views of Judge Gary, chairman of the Steel Corpora- 
tion, largely also stimulated the buying of both steel and the 
steel stocks. It was a double-barreled gun that he fired on 
leaving for Europe, and it was heard all over the country. 

At the beginning of June the weekly production of iron 
was 3 per cent, less than at the same time in May, and 50 per 
cent, less than in June 1907, and the recovery has so far 
been small. Our iron production in June aggregated 1,088,634 
tons, or 80,000 tons less than in May, making 6,000,000 tons 
for the half year, or half as much as in the first half of 1907- 
But the brightening sky was seen in the re-employment of 
thousands of iron workers in the Pittsburg mills early in July. 

We have a practical commentary, however, on the depression 
in this and other industries in the extensive emigration of alien 
laborers to Europe since the panic, and the comparative sus- 
pension of immigration to the United States, the number of 
outgoers having been more than twice that of the incomers this 
year. In the first six months of this year we lost 377,664 by 
this emigration and gained only 186,586 by immigration. This 
reversal of the human tide, on so large a scale, is without prec- 
edent in our history. The exodus is still going on, and it is as 
reliable a barometer of the times as the iron trade. It shows 
which way the wind blows. When the wind decidedly changes 
it will tell the tale by an East to West movement, and the 
change cannot be very far off. 

Another barometer is to be found in the country's bank 
clearings, which in March were one-third less than in 1907; in 
April twenty-three per cent, less, and in May twelve and a half 



166 TRADE CONDITIONS 

per cent. less. This looked like steady recuperation, yet in 
June the shrinkage ranged from fourteen to twenty-two per 
cent., hot weather having been conducive to dullness. 

Railway gross earnings, too, in June showed an average de- 
crease from last year's figures of about twenty per cent., which 
is larger than was reported in March and April, notwithstand- 
ing the decrease in the number of idle cars from 413,338 — 
their largest aggregate — to 312,847 on the 24th of June, with 
further reductions still being made. Between May 13th and 
June 24th the decrease was nearly 100,000, according to the 
last report of the American Railway Association. 

If we glance at business failures in June, we see a dark 
spot, for they were reported by the commercial agencies to 
have exceeded those in 1907 by thirty-four per cent. In the 
first six months of 1908 they numbered 7,560, with liabilities 
of $178,555,882 and assets of $103,168,993, an increase of 58 
per cent, over 1907- Dullness of trade naturally exhausts the 
resources of the weak. But it is a time when all should brace 
up and make the best of their position. 

The July Government crop report showed that while a 
bumper harvest of wheat is impossible this year a good average 
crop is already assured; and considerably more than an average 
crop of corn is probable. Not only was the condition of the 
corn crop on the first of July 82.2 per cent., or two points 
higher than at the same date last year, but a hundred million 
acres had been seeded to it, or 1,065,000 acres more than last 
year. This indicates a yield in excess of twenty-seven hundred 
millions of bushels, or two hundred millions more than last 
year's crop. Here we have a total that has been exceeded 
only once in our history, and that was by the twenty-nine hun- 
dred million bushel crop of 1906. 

We must not forget that the corn crop is more important, 
and has a larger money value, than the wheat crop. Although, 
owing largely to the floods in the Southwest, the condition of 
the Winter wheat on the first of July was nearly six points, or 
twenty-seven million bushels, lower than on the first of June, 
it was still high, 80.6 per cent, being a little above the ten 



TRADE CONDITIONS 167 

years' average. It was also considerably above the percentage 
at this time last year, and only 75,000,000 bushels below the 
bumper crop of 1906. The July condition of Spring wheat — 
89-4 — was also a little above last year's percentage, and the 
average for ten years, namely two points, yet five points under 
the June figures; but it indicates a crop of 276,276,000 bushels, 
which has only twice been exceeded. These statements may 
not be very entertaining, but they are comforting, as they give 
us assurance that we shall not want for our daily bread. So 
the Lord's Prayer, at least, will be answered, notwithstanding 
any damage to the crop in July. 

The aggregate yield of Winter and Spring wheat indicated 
by this first of July condition report is 692,790,000 bushels, 
whereas the final harvest yield last year was only 634,000,000 
bushels. Of course, we are not yet out of the woods, except 
as to Winter wheat, which is already harvested, for it is too 
early to speak with certainty of precise ultimate results in 
Spring wheat and corn. But we have good reason, from pres- 
ent indications, to hope for good crops of all kinds. This re- 
mark particularly applies to cotton, owing to its largely in- 
creased acreage, and its reported condition, which is about 81 
per cent, against only 72 per cent, a year ago. 

While cotton is no longer " king " in the old Southern ante- 
war sense, Agriculture is king, in this country, for it lies at 
the foundation of all our national prosperity and is the prime 
source of our national wealth and progress. All wealth has 
its origin in the ground. So, without being at all greedy, we 
naturally want the earth, and always will want it, for the 
earth and its products are what have made us what we are as 
a nation. 

In surveying the whole situation we can see a good deal that 
is conflicting and contradictory, but this is a natural result of 
our immense and diverse business interests, and the vast extent 
of the country itself. Ours is a land extending through all 
climates, and yielding almost everything that all the rest of 
the world yields of commercial value, and one second to no 
other in its industrial resources and achievements. 



168 TRADE CONDITIONS 

So just as doctors differ, business men naturally diagnose 
the trade situation from different localities, positions and points 
of view, and according to his environment and point of view 
is each man's opinion colored. But all agree on one point, 
which is that this is a great country, with a magnificent future 
that nothing can mar, and that all our business setbacks are 
merely passing clouds, to be followed by renewed prosperity 
still greater than before. 

Let us then get ready for the renewed activity in trade that 
will follow the abundant harvests which Providence has in store 
for us; harvests that will be welcomed not alone in the New 
World but in the Old World that is anxiously waiting to buy 
what it so greatly needs, our surplus grain and cotton. The 
prospect before us is indeed bright, despite the passing clouds. 
Day by day we can more and more clearly see the Phoenix 
rising from the ashes. 



BANKS AND THEIR RELATION TO COMMERCE 
AND PROSPERITY REVIVAL 

Address delivered at the Commercial Travellers' Prosperity Con- 
gress, Metropolitan Building, New York, August 14, 1908. 

CAPITAL and credit are to the business world what the 
heart and arteries are to the human body. The banks 
which supply the capital and furnish the credit are a 
necessary part of the great commercial system, and should go 
hand in hand with the merchant and manufacturer. The 
banks should endeavor at all times to furnish reasonable credit; 
on the other hand, the borrower should endeavor never to strain 
his credit with his bank. There come times, especially after 
a period of great prosperity, when both merchant and manu- 
facturer become " prosperity crazed " and are more than likely 
to overload and to over-manufacture. 

When this is the case it is time for the wise bank officer 
to gently apply the brakes. Panics are prevented only by cau- 
tion, and the bank officer with the good judgment and foresight 
to recognize when the danger point has been reached is the 
one who, in the long run, proves himself most worthy to fill 
his position, and is marked as a leader whom men should fol- 
low. Without our banks chaos would reign in all business 
circles, and even the populist and socialist do not advocate their 
extinction. 

It is hard for an ignorant man to appraise the value of our 
banking system, for to him it means nothing. Having no 
dealings with banks himself, he cannot grasp the fact or the 
extent of their usefulness. 

To you, the Commercial Travellers of this great country, it 
seems almost needless to talk on this subject. You are the 
men who make business. You are the men who preach the 
169 



170 PROSPERITY REVIVAL 

gospel of prosperity, and whose reports to houses you repre- 
sent, govern the policy of your superior officers for the next 
succeeding season. The deliberations of a Commercial Trav- 
ellers' Association, and the consensus of opinion there expressed, 
carry great weight in the mind of the public, as you are the 
men who know by experience and contact what the opinion of 
the merchants is regarding business in every section of the 
country. Newspapers may publish glowing accounts of the 
actual or probable conditions, but if these statements are 
doubted or denied by the great body of Commercial Travellers 
they fall flat, or have little weight. 

I trust that your Prosperity Congress may become one of 
the leading events of each year, and that your views may be 
made known. 

Looking at the present ease in money, with call loans at 1 
per cent, per annum, and the general feeling of security, and 
the gradual improvement in business, the panic of last year 
appears anomalous, if not ridiculous. Since that time the 
Emergency Currency Bill has been passed, and its wise pro- 
visions, though far from perfect, will enable the banks to pre- 
vent another such panic and will insure the commercial world 
against such stringency of money as obtained last fall. Com- 
mercial paper, of approved grade, has been recognized as high- 
class collateral, and acceptable in a stated ratio, as a basis for 
the issue of Emergency Currency, and strengthens the relations 
between banks and merchants. Their cause is a common cause 
and they will work together for the common good. 

Every Commercial Traveller will now be a factor in the great 
financial plan; for what he sees, hears, and reports, will in- 
fluence the credit of the houses he visits, and help to determine 
whether or not their credit is good enough to be accepted as 
currency collateral in a great emergency. 

One of the great drawbacks to general business during the 
past year has been the " isms " that have been preached by 
the demagogues, and believed by hearers who ought to know 
the fallacy of such doctrines. You, gentlemen, can be, and no 
doubt are, preachers of the true doctrine of Common Sense. 



PROSPERITY REVIVAL 171 

Your power for good in this direction is unlimited. You are 
the people, and it is your privilege to plant good seed that will 
blossom and bear the fruit of prosperity. 

A comparatively few years ago men of your profession were 
known as " drummers " and many sneered at your calling. To- 
day the respect you command is the best salve to cure the old 
wounds inflicted. You have come out on top, and he laughs 
best who laughs last. I am glad that you have won, and hope 
that the members of your organization will have for their motto: 
" One for all, and all for one." 

Let no jealousies or desire for personal gain influence you 
in your work as an association. In your daily work you will 
of course compete with each other in selling goods. That is 
what you are paid for. But in your organization work you 
must bear and forbear, and study and discuss methods that will 
benefit all of your members and those whom you represent as 
well. 

Just at present many of the smaller merchants in our coun- 
try are like setting hens, and will lay no golden eggs. Shoo 
them off from their nests and compel them to get busy. 
Money is plentiful and will be for a long time to come. En- 
courage them to get into debt. They are over-cautious now and 
want to be prodded a little. Down in Wall Street we have all 
waked up during the past few weeks, and the troubles of last 
year are but a nightmare. Wall Street has always been the 
barometer of trade, and I believe it foretells great activity in 
the commercial world during the coming months. 

The farmers have money to burn; get busy this Fall, and 
show them how to burn it judiciously. That is your mission in 
life, and now is the time for you to prove it. 

The history of the lives of many of you would make in- 
teresting and instructive reading for the boys of the day. I 
know about the struggle in the beginning of a career on the 
road. The coward dies a thousand deaths in that period and 
suddenly finds himself born again a brave man. One big trade 
consummated, one important customer secured, one trip which 
causes words of commendation on his return home, are each, 



172 PROSPERITY REVIVAL 

and all, the elixir of life to the despairing beginner which puts 
red blood in his veins, and paints his first rosy view of the 
path to success. One young fellow who had been stage-struck 
and had been travelling with various theatrical companies for 
about a year, and had acquired experience enough to prove 
that he was a dead failure as an actor, secured temporary work 
as a salesman and was sent to a little country town, three miles 
from a railroad, to sell goods to the keeper of the general store. 
As only two trains a day ran on the railroad, he had plenty 
of time to walk to the store and did so. He arrived in the fore- 
noon, showed his samples, and was gruffly informed that there 
was nothing doing. 

At noon time he went back to the store, sat on a barrel and 
ordered a lunch of crackers and cheese. After several attempts 
at conversation with the store-keeper he secured his interest for 
a few moments and began to relate to him his experience as a 
would-be actor. The old man listened and was pleased. After 
a while the youngster mustered up his courage and produced 
his samples, and, much to his surprise, made a sale. As soon 
as he secured the order he hurriedly excused himself and im- 
mediately got out of sight of the store, started and ran the 
three miles to the railroad town for fear the store-keeper would 
come after him and cancel his order. That boy that day 
achieved something. He conquered where others had failed 
and knew the sweets of success. He struck his first gold in 
a deserted mine. 

During the past quarter of a century there have been marked 
improvements in travelling facilities and hotel accommodations. 
Much credit for these improvements is due to the commercial 
traveller. He knows what is good and knows enough to de- 
mand it. No railroad and no hotel can afford to enjoy the 
hostility of the commercial traveller. He is the best advertise- 
ment they can have, as he is on the go the greater part of his 
time. His occupation makes of him a companionable fellow, 
and it is part of his nature to swap opinions with those with 
whom he comes in contact. In seeking comforts for himself 
he secures comforts for his fellow men. His demands may be 



PROSPERITY REVIVAL 173 

selfish, but they result in good to others. He knows the market 
value of a traveler's rights, and cannot be fooled or deceived 
by argument. Argument may satisfy the occasional guest who 
is journeying for pleasure, but the commercial traveller is sat- 
isfied only Avith facts. 

Our athletes have recently proven their ability to beat the 
world. Surely you are in good training to prove that you are 
fit to rank in their class. Their success depended upon their 
muscle and wind; yours depends more on your nerve and wind, 
and if it were not for the anti-gambling law I would be almost 
willing to bet that you have both nerve and wind to spare. 

Last fall thirteen banks and trust companies in New York 
City were obliged to close, owing depositors about ninety mil- 
lions of dollars. This week the last of these has resumed 
business and every depositor will be paid in full. This splen- 
did achievement of resumption reflects great credit on the men 
who have been in charge in the interim, and closes the last gap 
in the sad history of that season. Let us hope that the lesson 
which brought temporary sorrow to so many will have a salu- 
tary effect on all in charge of financial institutions, and will 
cause our bank examiners to keep a more rigid watch over 
the condition and management of these institutions. Our 
laws are all right if they are obeyed, and our banking system 
is sound. If examiners will examine and directors will direct, 
such a state of affairs as has existed will be impossible. 

Honesty and truthfulness attended by fair dealing are the 
very cornerstones of all business. Apply these principles in 
your dealings and men will respect and trust you. 

The great corporations of this country who have been violat- 
ing the laws of the land as well as the laws of right and wrong, 
have been commanded to halt during the past year or two. 
Our laws are all right, though Mr. Roosevelt has used a sledge 
hammer in enforcing them when more gentle treatment would 
probably have sufficed. He was right in his policy though a 
little violent in his language at times. The officers of the cor- 
porations who violate the law should be punished by imprison- 
ment, and if they know that they will be treated as criminals 



174 PROSPERITY REVIVAL 

they will be more careful to see that the laws are not broken. 

It has given me great pleasure, gentlemen, to meet you here 
to-day, and I thank you for the courtesy you have extended 
to me. I hope that your association will prosper and continue 
to do good work. 

I will close by wishing each and every one of you a full 
measure in the new era of the prosperity which we hope and 
believe is before us. Upon your success as the advance agents 
of prosperity the near future will largely depend. 



NO GOVERNMENT GUARANTEE OF BANK DEPOS- 
ITS, AND NO OWNERSHIP OF RAILROADS BY 
THE GOVERNMENT 

Address delivered at the Annual Meeting of the American Institute 
of Banking, Baltimore Chapter, Baltimore, Maryland, October 13, 1908. 

AS an opponent of that financial heresy, a Government 
guarantee of National banks deposits, I am indeed glad 
of the opportunity to address you, at the invitation of 
your Association, as one conversant with the financial and gen- 
eral business situation of the country. But as I am not a 
politician, I shall confine myself to a brief consideration of a 
subject affecting the banks, which is now engaging public at- 
tention, leaving the discussion of purely political questions to 
others. 

I am most strenuously opposed to the Government guarantee 
of bank deposits, as it is a measure unsound in principle, and 
fraught with great danger both to the Government and the 
business of the country. 

This danger is indeed incalculable, and to be measured only 
by the vast amount of deposits involved, and by glancing at 
the possibilities attendant on the actual trial of such an her- 
culean experiment, the enactment and enforcement of such a 
mammoth piece of monetary and legislative sophistry. 

It is the promise of this that is now held out as a glittering 
bait, of course to catch the votes of bank depositors at the 
November election. It may be properly and justly stigmatized 
and denounced as a delusion and a snare. 

To try such a nostrum on so gigantic a scale; to build upon 
the foundation of such a fallacy, would be to court only dis- 
astrous results, and might involve a national cataclysm. 
175 



176 NO GOVERNMENT GUARANTEE 

It would therefore be one of those blunders that are worse 
than crimes. 

With the Government the guarantor of the country's national 
bank deposits, suppose, for a moment, that some great and dev- 
astating calamity, some unprecedented convulsion of nature, 
occurred, involving the destruction, or ruin, of the banks of our 
large cities. What would be the result? 

Such a contingency, of course, is very remote indeed, but 
we must look to the remotest possibilities, as well as probabili- 
ties, in considering a project of such vast and far-reaching 
importance. 

The mere liability of the Government to unforeseen perils, 
would be likely to create distrust if it became the guarantor 
of the National bank deposits, and would tend to lower its 
credit, and the market value of its bonds both at home and 
abroad. This would, in turn, tend to unsettle and impair con- 
fidence in National bank notes, which are all based upon and 
entirely secured by United States bonds. There are now 6,780 
National banks in existence, and their number and deposits will 
go on increasing with the country's growth. Already their de- 
posits aggregate $4,313,657,000, exclusive of Government 
money on deposit. 

The adoption of this political and financial heresy would, 
at the same time, tend to make a huge political machine of the 
National banking system, similar in kind, but on a far larger 
scale, to that which turned the first United States bank into a 
hotbed of corruption and favoritism and led to its inglorious 
end. 

The fate of the later Government experiment — that of the 
Second United States Bank — was identical with that of the 
first one, owing to the same causes. Both were practically run 
by Washington, although located in Philadelphia, with leading 
politicians, including Cabinet officers and members of both 
Houses of Congress, as the wire-pullers and virtual managers 
of their loans and Government deposits. 

The popular complaint then was that the United States Bank 
led to too much concentration of financial power in the hands 



OF BANK DEPOSITS 177 

of the Federal Government, accompanied by the inevitable 
abuses of this power. 

We can easily imagine how much greater would be the popu- 
lar protest against such centralization of power at Washing- 
ton, as a Government guarantee of National bank deposits 
would produce, now especially, as the centralization of political 
and financial power there has increased so largely already as to 
excite some misgivings as to its future effect upon the nation. 

Then, too, if a Government guarantee of National bank de- 
posits became an accomplished fact, its advocates would hardly 
stop there. They would in all probability demand that the 
deposits of all the banks in the United States, State as well as 
National, should be included in the guarantee; and there were 
in operation on the first of July last 14,611 State banks, with 
resources aggregating $11,274,013,407 — an increase of 1,294 
banks and $105,498,000 in resources within a year. 

The immensity of the figures should admonish Congress to 
turn a deaf ear to the clamor for a Government guarantee. 
Moreover, a Government deposit guarantee would be much too 
paternalistic for our Republican form of Government or the 
welfare of American citizens, and it would be an uncalled for 
interference with the legitimate business of banking. 

It would also be a long step towards Socialism, and Socialism 
is antagonistic to free government and individual independence. 
It is particularly so in the United States, where the triumphs 
of individualism have been greater than in any other country, 
and where, as a result, our national progress has been cor- 
respondingly great, and has eclipsed that of all other nations. 

To reduce us all to the one deal level of uniformity and 
mediocrity that Socialism would call for. and compel would be 
to consign us to a condition contrary to the spirit of American 
institutions and our Declaration of Independence; and to adopt 
the proposed Government deposit guarantee would have a sim- 
ilar effect upon our National banks, and entire banking sys- 
tem. By reducing good and bad banks to an equal footing, in 
this respect, it would wrong the good banks. 

A guarantee system would destroy the incentive for sound 



178 NO GOVERNMENT GUARANTEE 

banking and place a premium upon unsound banking, so that 
the reckless and inefficient banker would be on the same foot- 
ing with the prudent and experienced banker, all of which is 
unthinkable. It is socialistic in its tendency and a far-away 
cry from true democratic principles, which oppose excessive 
centralization of power. 

As a radical measure it would be entitled to rank with the 
" sixteen to one " silver heresy, which was happily exploded 
and discredited in time to prevent its enactment by Congress. 
A Government deposit guarantee is neither essential to sound 
banking nor the safety of depositors, and no country in the 
world has ever tried or attempted it; nor has it ever been 
seriously proposed anywhere but here and now. 

This should have weight when we consider how much older 
the European nations are in banking experience than ourselves, 
and although we are far more rapidly progressive in our new 
and glorious country than they are, we should not be above 
profiting by their longer banking experience. 

One million and a half of bank stockholders and fifteen 
millions of depositors have interests in common, and they 
should unite in opposition to a Government guarantee. They 
are all equally interested in maintaining the solvency of the 
banks. But those agitating in favor of a Government guaran- 
tee are endeavoring to create antagonism between them on the 
theory that the depositors make the banks the prosperous in- 
stitutions that they are, and so deserve to have their deposits 
guaranteed, whereas they only supply the banks with money 
which has to be judiciously employed in order to make money. 
Depositors, in return, receive the services of the banks. 

Deposits are consequently like raw cotton put into the weavers' 
hands, which can only be made profitable by being spun. The 
banks do the spinning in the shape of loans and discounts, and 
upon their skill and good management of these depend their 
profits; and they pay the penalty of bad management in losses. 
So honest and capable management is necessary to success in 
the banking business, fully as much as in any other, and the 
use made of the deposits involves success or failure. 



OF BANK DEPOSITS 179 

But failure, with good management, is very exceptional, and 
due to some extraordinary state of affairs, such as a great panic, 
and even then it is only temporary. Hence the losses to 
National bank depositors by failures of banks in the forty 
years, since the National Bank System was established as a 
result of the Civil War have been only trifling. They have 
amounted to only one-twenty-sixth of one per cent, of their 
total number per annum. 

This furnishes an argument against a Government guarantee 
on the ground of its being entirely unnecessary, apart from its 
being wrong in principle, and conducive to frauds by bank 
officers in view of the Government having to replace the de- 
posits. 

It would be hardly surprising if, in small towns, some bank 
officers, among the many, were dishonest enough to misappro- 
priate, or run off, with the money of their banks, when they 
knew that the Government would pay the depositors, who were 
their friends and neighbors, while they might be deterred from 
doing so if there was no Government guarantee to guard the 
depositors against loss. 

The advocates of the Government guarantee, in their argu- 
ments, seem to overlook or forget the fact that the deposits 
of the National banks are very largely secured as it is, apart 
from their circulation being absolutely secured by the deposit 
of United States bonds with the Treasury. 

In the first place they have capital aggregating, according 
to the Comptroller of the Currency's last compilation, $912,- 
362,000, and their stockholders are liable for double the amount 
of their stock, to meet any deficiencies in the event of failure. 

Added to this they have a total surplus of $555,000,000 and 
$203,109,000 of undivided profits. We see that these resources 
aggregate not far from fifty per cent, of their deposits, a sum 
many times greater than that of any fund that has been sug- 
gested for guaranteeing deposits by the banks themselves. 

Outside of other considerations there is neither justice nor 
equity in making strong and well-managed banks meet the de- 
ficiencies of the ill-managed and the crippled that fail, so 



180 NO GOVERNMENT GUARANTEE 

divesting them of some of the fruits of their success. The 
strong and successful banks should not be made to pay for the 
mistakes of the unsuccessful weaklings by contributing to a 
fund for paying the deposits of failed banks. 

Most certainly if bank deposits are to be guaranteed, the 
Government should allow it to be by an independent organiza- 
tion of the banks themselves for that purpose. Their inde- 
pendence of further Government control would thus be 
preserved by the banks, and the machinery of the guarantee 
system would work better and more expeditiously and inexpen- 
sively than if the Government had charge of it. But the op- 
ponents of the guarantee, among the banks, are largely in the 
majority and declare that it would make the strong and well- 
managed banks pay for the shortcomings of the weak and ill- 
managed banks, and that therefore a deposit guarantee system 
would be a guarantee at their expense. We should of course 
avoid robbing Peter to pay Paul. 

I refer to this matter only because it is receiving so much 
public attention at the present time. But in connection with 
it, I advocate the closer supervision of banking and brokerage 
firms that are members of the New York Stock Exchange Clear- 
ing House — by its establishment of an auditing department 
for the examination by expert accountants of the affairs and 
accounts of any of its members rumored to be in trouble, or 
suspected of doing an irregular business. 

Authority should be vested in the Clearing House to order 
such examination at any time, when deemed necessary, and to 
promptly publish the result. This would expose weakness, or 
unsound conditions, where they existed, and relieve solvent 
houses from the suspicions growing out of false rumors, thus 
restoring confidence where confidence was justified. Similar 
auditing departments for the same purpose could be established 
in other large cities with great advantage, for in such publicity 
there would be safety for depositors and other creditors without 
any guarantee, and protection for the banker, or broker, who 
is sound and solvent. Therefore, let us have publicity. 

This doctrine is not a new one to me, as two and a half years 



OF BANK DEPOSITS 181 

ago, that is, on April 25, 1906, in an address before the Whar- 
ton School of Finance, of the University of Pennsylvania, I 
said in part: 

" Corporations and banking and mercantile firms that become 
at all objects of suspicion should, in their own interests, speed- 
ily clear themselves by inviting the fullest examination and 
publicity. Unsoundness and irregularity, if such existed, would 
thus be exposed and weeded out, instead of being nursed in 
secret, and so doing harm and impairing confidence in corpora- 
tions and firms perfectly sound and regular in their methods 
and practices. The sound concerns would stand better than 
ever after passing through this ordeal of publicity. The New 
York Legislature, as well as the legislatures of the other States, 
should respond to the popular agitation for publicity by pass- 
ing laws requiring all corporations, including banks and trust 
companies, to make at least semi-annual reports of their condi- 
tion, certified to by registered public accountants, with power 
invested in the State Superintendents to order special exam- 
inations by such accountants, at any time, when deemed neces- 
sary; that is, whenever they were suspected of being unsound 
or irregular in their business methods. This should be done 
for the protection of others as well as to clear them of sus- 
picion and restore their credit, if found to be sound and 
straight. Only the insolvent and crooked would have any- 
thing to fear from this wholesome publicity. 

" In this way disaster might be averted and impaired con- 
fidence promptly restored. I lay stress upon the employment 
of skilled accountants because the certified results of their 
examinations would be accepted as conclusive of the actual 
conditions being as they stated or described. They would 
speak with authority. It should be made a felony for an 
accountant to make a false or misleading report, and he should 
ever after be disqualified from practicing. 

" To meet the growing demand for them, every college and 
university should have a department for the special training 
of accountants, who on graduating should receive a diploma or 
degree, as in the medical or legal profession. Already the 



182 NO GOVERNMENT GUARANTEE 

position held by certified accountants is high, but it should 
be raised still more by the action of the universities and col- 
leges. Some of these have established departments for ac- 
countants, where the students undergo thorough training by 
men who have had practical experience in the profession, but 
all institutions of learning ought to have them and maintain 
them in a high state of efficiency in view of their importance 
to the business community." 

Just now the zeal of the Government guarantee advocates 
is so great that it strengthens the suspicion that their immediate 
object is less legislation by Congress than to influence the votes 
of the fifteen millions of bank depositors. But however that 
may be, let us avoid a Government deposit guarantee as we 
would a poisoned arrow, and leave banking to the bankers. 

One objection raised by bank officers to the proposed Govern- 
ment deposit guarantee is that it seems to cast doubt upon their 
honesty and the good management of all banks, and, so far 
as this doubt exists, it calls for stricter official supervision of 
both the National and State banks, as a remedy. 

The new Comptroller of the Currency recognizes this, and 
has called the National bank examiners to account for negli- 
gence and incompetency, and warned them that their examina- 
tions must, in the future, be much more thorough and frequent 
than they have been hitherto, under the penalty of immediate 
dismissal. 

This stricter supervision is the very best way to strengthen 
public confidence in banks, and confidence far more than cur- 
rency is needed to prevent or allay panic. 

The Chicago banks, after the Walsh failure, two years ago, 
took the initiative in this direction among themselves, and 
organized a system of examinations and supervision of their 
own, employing their own examiner. The St. Louis banks 
promptly followed their example, and the result was that in 
both cities the banks stood the strain of last year's panic with- 
out disturbance, and came out of the ordeal unscathed. 

The San Francisco banks have since done likewise with good 
results; and the New York banks, and those of all the other 



OF BANK DEPOSITS 183 

large cities, should take similar action without delay. This 
close supervision of all the banks in a clearing house by them- 
selves, for the common good, furnishes them with the right kind 
of publicity of accounts, free from politics. 

It does not supersede or dispense with the usual examina- 
tions by National and State examiners, but is supplementary 
to these, and a check upon them; and it practically prevents, 
or promptly exposes, frauds and all irregular practices. 

The fact of the banks in those cities having adopted this 
method of self-protection shows that it was needed and that 
the examinations by the National and State examiners were 
inadequate, owing as much to their incompetence as to their 
negligence, for, not being bankers, except in rare instances, 
they were unequal to their task; whereas the examiners em- 
ployed by the banks were experienced experts drawn from 
their own ranks. 

With a perfect system of bank supervision and examina- 
tion, all over the country, and the consequent publicity of 
condition, bank frauds, and bank failures would be almost 
impossible and confidence in banks would so far increase that 
there would be no call for a guarantee of deposits. 

The banks alone can and should accomplish this, but the 
Federal and the State Governments should earnestly co-operate 
with them by increasing the number and efficiency of their 
bank examiners and the frequency and thoroughness of their 
examinations. 

This ounce of prevention would be better than a pound of 
cure, and bank deposits would need no guarantee. 

Gentlemen, I have no hesitation in saying that the Govern- 
ment deposit guarantee, as an issue, is another instance where 
Mr. Taft's opponent has again lost his anchor. 

The proposition that the Government should purchase and 
operate railways of the country is a question open to even 
stronger objections and more serious condemnation, than the 
Government bank deposit guarantee. 

The vast extent of the United States, and the corresponding 
vastness of our railway system, would make the purchase and 



184 NO GOVERNMENT OWNERSHIP 

operation of our railways by the Government so extremely 
hazardous and gigantic an undertaking that it can hardly be 
regarded as a possibility. 

While I believe in the regulation by the National Govern- 
ment of the railroads and corporations doing an Interstate 
business, I do not believe in Government ownership. While 
I believe in the closer supervision of our National banks by 
the Government examiners, I do not believe in a Government 
Bank, nor in a guarantee of deposits by the Government. 

The growth of our railroads has been phenomenal during 
the past twenty-five years, and we have only begun to expand. 
The coming quarter of a century is bound to see even greater 
things done than we have witnessed during the last similar 
period. The increase in our population, home born and im- 
migrants from foreign shores, will compel our earnest efforts 
to keep our facilities equal to the demands that will be made 
upon them. 

Private capital can always be found to enter a legitimate 
field of competition for building and financing improvements. 
Capitalists can and will take a risk which would be neither 
wise nor prudent for our Government to assume. In case the 
Government could purchase and operate the railroads of the 
United States, think of the billions that would be added to 
our National debt! Think of the hundreds of thousands of 
workmen who would become office holders ! In case of the 
unfortunate election of an unwise or corrupt candidate for 
President, think of the unlimited power he would have for 
evil! 

I have no data at hand which gives the yearly amount of 
damage suits against the railroads based on loss of life, per- 
sonal injuries, etc. As the greater part of these suits is settled 
out of court there is no means of computing them, but they 
run into many millions. Under Government ownership these 
damages would be much larger as sympathy is always with the 
afflicted, and the Government would be " soaked," as a cor- 
poration has no soul, even if owned by the Government, while 



OF RAILROADS 185 

both the victim and the jurymen, who would serve at the trial, 
have souls, and a fellow feeling would make them wondrous 
kind. 

Should the Government assume to guarantee bank deposits, 
in addition to buying all the railroads, where would we be, 
and how could we sell Government bonds in case we were 
drawn into an unavoidable war? Our railroads increased their 
bond and stock issues from $3,159,000,000 to $15,686,000,000 
between 1873 and 1908. Our bank deposits increased from $2,- 
182,000,000 to $13,099,000,000 in the same time, and our popu- 
lation from 41,677,000 to 87,603,000, while our office holders 
in the employ of the National Government have increased cor- 
respondingly, so I say, let the railroads remain in the hands of 
the bond and stockholders. Let the banks combine to protect 
depositors themselves, but let the Government officials see that 
the laws are rigidly enforced, without fear or favor, and the 
corporations will cease to be objects of attack by either the 
demagogue or the representatives of the law. 

The railroads at the present time employ about 1^ millions 
of people. Of these, it is conservative to say, one million are 
voters. Within the next twenty-five years 50 per cent, will 
doubtless be added to that number through the growth of our 
railway system. In the event of Government ownership of the 
railroads, meanwhile, this vast army of employees would be a 
political power that would by its votes and influence be great 
enough to control every four years the National election. 
Moreover, it would become a prolific source of political corrup- 
tion. 

The Monroe doctrine as a menace to other nations may some 
time get us into trouble. Suppose, for instance, that Germany 
and Japan should form an alliance against the United States 
to break this doctrine, and war should result, and the combined 
powerful fleets of the two countries should be sent to dev- 
astate our coast cities; and that during the conflict they should 
be able to float airships over the bank reserve cities and great 
railroad centres and terminals, and drop bombs down into these 



186 NO GOVERNMENT OWNERSHIP 

cities and destroy the great financial institutions and railroad 
terminals. How could our Government credit stand the strain, 
if already responsible for $15,000,000,000 bank deposits and 
$15,000,000,000 for railroad obligations which amount will in 
both cases increase at least 50 per cent, in the coming twenty 
or twenty-five years? The distrust that would grow out of 
such overwhelming obligations could not help but cripple the 
credit of the Government, and would make it impossible to in- 
crease her obligations by selling bonds to carry on a war. 

Such a case is, of course, a very remote possibility, but it 
must be considered before the Government enters into such rash 
undertakings as the guaranteeing of bank deposits, or the own- 
ership of railroads. It is well to consider all exposed points 
in connection therewith before launching out thoughtlessly in 
any such phantom schemes. 

The best preventive of war is a thorough preparation for 
war. The best way to be able to enforce the Monroe doctrine 
is to demonstrate our ability to maintain it. To keep our Na- 
tional debt low, and our credit where it now is — the highest 
of any nation in the world. 

The very fact of a burdensome debt would invite attack. 
The theory of Government guarantee and ownership is satis- 
fying to the dreamer, but it never will be wise until the mil- 
lenium comes. 

The San Francisco earthquake was a terrible disaster, but 
its effects were minimized by the willing and speedy assistance 
instantly rendered from all over our land. 

Think what the effect would be if an airship loaded with 
bombs could hover over New York City for even an hour, 
dropping constantly destructive bombs in its flight, and other 
cities feared the same kind of an attack might be visited upon 
them! They would naturally conserve their wealth for self- 
protection and be unable to do much in the way of charity, and 
panic and chaos would sweep over the land. 

Gentlemen, I ask the question: Are you in favor of such an 
herculean power as this, in addition to all that now exists, 



OF RAILROADS 187 

being centred in Washington, the seat of our Government? 
Such centralization would be of itself a great evil, and a 
menace to this Republic. 

After the coming election the tariff question will be the 
supreme question of interest in the public mind. Both candi- 
dates are pledged to call an extra session of Congress to re- 
vise the tariff. Naturally, most of our citizens favor the re- 
vision by the Republican party, which party is friendly to 
protection. 

I believe a sane and healthy revision is absolutely necessary, 
but the subject must be handled with extreme care. Any 
change in tariff rates will for a time check business. The 
present Congress will probably say nothing on the subject that 
will have any effect as the coming session is the short session, 
and the life of the present house expires on the 4th of next 
March. 

When the new Congress meets in extra session in the Spring 
of next year there is likely to be free discussion and then the 
Committee on Ways and Means will be instructed to prepare 
revised schedules and report same to Congress. 

The foretaste of future legislation on that vitally important 
subject is encouraging, because it is urgently needed, — not 
only for the relief and benefit of American consumers — that 
is, the whole American people — but in the interest of the smal- 
ler manufacturers whom protection has ceased to protect, 
through the undue advantage it has given to the Trusts and 
large manufacturing interests, and the severe competition it has 
fostered here. 

While, as I have stated, both political parties promise tariff 
revision, they disagree in the object and principle of the re- 
vision. 

The Republican party is wholly and squarely pledged to the 
policy of protection for American industries, and always has 
been, in order to keep up the high price of labor, and its Amer- 
ican style of living, thus promoting the welfare of the wage- 
earning masses of the people. 



188 THE TARIFF QUESTION 

The Democratic party, on the other hand, has always leaned 
toward free trade far enough to favor a tariff for revenue only, 
and Mr. Bryan is now in his speeches advocating the sweeping 
away of protection and the substitution of a revenue tariff, ar- 
guing that, as it would lighten the burdens of the people who 
have ultimately to pay the duties, it would be better for the 
country and would sweep away monopolies. 

But as any sudden and radical changes in the tariff would 
seriously disturb our industrial and general business interests, 
I urge the need and wisdom of going slowly and surely to 
avoid the danger of such disturbance. There is not the slight- 
est doubt that the policy of protection will be continued, but its 
provisions should be modified to correct the inequalities and ex- 
cessive rates which now prevail. 

Protection under high tariff rates certainly benefited the coun- 
try well as a war measure. It also nurtured our great industries 
in their infancy; but these industries have grown to such pro- 
portions as to be able to stand alone. In fact, many of them 
have become dictators who have crushed their small competi- 
tors. We want a tariff that will protect American industries 
sufficiently, but not excessively. One which will enable us to 
open and keep new markets in the Oriental lands and elsewhere, 
through cheapening raw materials which we import for their 
manufacture, thus stimulating our own manufactures. 

We should have a measure which would tend to curb and 
regulate the Trusts, and not destroy them, or impair their use- 
fulness; one which would give the Trusts a square deal, but 
no special favors. 

The coming session of Congress will probably witness the 
introduction of amendments to our laws governing and super- 
vising Interstate commerce and travel to prevent unjust dis- 
criminations, including the giving or accepting of rebates from 
the regular rates, or other preferences. Those who break these 
laws should be punished by imprisonment, without fear or favor. 
This would be far more just than a fine, which would be paid 
by innocent stockholders, or by the arrest or dismissal of a 
minor officer who would be the scapegoat. We want to punish 



SOCIALISM 189 

the man higher up when he is the spring from which the un- 
healthful water flows. Socialism is being preached all over 
our land, and the prompt enforcement of the law punishing 
one who stands in a high place would be the best argument to 
prove to them that our laws are for the rich and poor alike. 

Discontent is the parent of Socialism. The aim of every 
one, politician, employer, and wage earner, should be to work 
together honestly and fairly for the common good of all. With 
fair laws, honestly administered, with work for the idle at good 
wages, and with the belief that the National administration is 
in the hands of sane and just men, no such mistaken policies 
as those advocated by the Socialist would appeal to the people, 
and the " ism " would die a natural death. 

Many Socialists are well-meaning men who suffer from men- 
tal astigmatism. Their view of life is distorted. But like 
the Populists of ten or fifteen years ago, a little money in the 
bank, a little less worry over what they shall eat or drink, 
or how they shall be clothed, will reform their ideas and 
straighten the defects of their vision. 

During the past eighteen months we have all been tried by 
the fire of adversity. We are on the road to better times, and 
I firmly believe we will be a better people and a better nation 
for the temporary suffering we have endured. 

I am not one of those who condemn the Socialists as a whole. 
I have met them on the platform, have engaged in debates with 
them, and have had the pleasure of meeting their wives and 
daughters. Some of their theories are beautiful, but utterly 
impractical. While ambition remains rooted in man's nature 
the theory of Socialism cannot prevail. It is the desire to ex- 
cel, and to climb a little higher in the plane of existence, that 
makes life worth living. Dwarf a man's ambition and you kill 
his hope and mar his usefulness. Ever since the ancient days 
there have been rulers and subjects; there have been employers 
and laborers, and those in power have been paid homage and 
tribute. It will be so always. All men cannot be captains in 
the industrial army, but they can be good soldiers. We can- 
not blame the very poor for joining in any social movement 



190 SOCIALISM 

when they themselves are cold and Hungry and they see the 
rich flaunting their wealth in fine raiment and automobiles. 
There is one great plane on which all can meet; that is, to 
follow the Golden Rule and extend a helping hand to the un- 
fortunate. Not by giving in charity, for charity pauperizes 
its recipients. But by helping to provide and secure employ- 
ment for the deserving. 

Let the strong help the weak. Let the righteous live such 
good lives that the wicked will see their good works and desire 
to follow them. 

Let the happy try to let a little sunlight shine on the unhappy 
and unfortunate. A kind word and a cheerful smile will often 
lighten sorrow and make misfortune a little easier to bear. 

Let us all become true Socialists by trying to make others 
happy. The man who makes a blade of grass grow where it 
never grew before is a public benefactor. The man who makes 
a ray of hope shine through a cloud of gloom is a true Socialist. 



INVESTMENT AND SPECULATION 

Address delivered to the members of the American Association for 
the Advancement of Science at the meeting held in Johns Hopkins Uni- 
versity, Baltimore, Maryland, December 30, 1908. 

I AM glad to have the opportunity to address this Associa- 
tion for the Advancement, of Social Science, for its name 
implies the advancement of civilization and the human 
race, and the improvement of our social and business life in 
all its aspects. No object could be more worthy, useful or 
humane, for it involves the betterment of the conditions under 
which we live, and the welfare and happiness of mankind. 

You have asked me to speak of investments and speculation, 
and I will begin by saying that the dividing line between in- 
vestments and speculation is extremely narrow. All business 
is more or less speculative, because it involves risk; and we are 
a nation of speculators. The impulse to speculate is indeed 
natural, and characteristic of the people of all countries. 

When a merchant buys merchandise he incurs the risk of 
depreciation in its market value before he sells it, and also the 
risk, not wholly covered by insurance, of its being lost or dam- 
aged by fire, or some other cause, in the meantime; and, when 
he does sell it, he has to run the risk of not getting paid for 
it, if he gives the usual credit to the buyer. There is the risk, 
too, of insurance not being paid in the event of a great fire. 

Do not the risks he thus runs in ordinary trade involve spec- 
ulation ? 

The most conservative of all investments is that of the farmer, 
who from seed-time to harvest watches and cares for his crops, 
and expects to reap as he sows. But he is dependent upon the 
elements, and nature may give him a good or a bad crop. The 
killing frost of a day, or an insect pest, may destroy, in whole 
191 



"l92 INVESTMENT AND SPECULATION) 

or in part, the work of months and the finest crop he ever 
raised. 

The risk of this makes even farming a speculation, not merely 
fancy farming by gentlemen with more money than brains, 
or I should say agricultural knowledge, but wheat, corn and 
cotton growing by the plain horny-handed toilers who farm for 
profit. 

Risk is also inseparable from investments in realty, mort- 
gages, railway and industrial securities, or any other kind of 
property. When investors purchase bonds or stock, they nat- 
urally wish to see their investments prosper by increasing in 
market value. But they may have bought too high, and prices 
for stocks or bonds may decline owing to general causes; or 
special causes may injuriously affect their value, and reduce 
their income earning, and interest or dividend paying power. 

The same remark applies in other ways, including the risk 
of defective titles, to investments in real estate, the value of 
which fluctuates with rents and local surroundings. Property 
in one neighborhood may improve largely, while adjacent prop- 
erty depreciates. Here again we see a speculative risk. 

The same keen discrimination that is necessary in making 
good investments in bonds and stocks is necessary in buying 
real estate. Yet, in both, the best judgment may be at fault, 
consequent on unknown or unforeseen circumstances and 
changes. Here again is the element of risk. 

Investments in real estate brought an immense fortune, from 
small beginnings, to John Jacob Astor and his heirs, because 
he bought land at very low prices that owing to the growth of 
the City of New York has since increased enormously in value. 
But they have often proved disastrous to those who bought 
more than they could pay for without borrowing on mortgage. 
Having mortgaged their property it followed that when they 
became unable to pay the interest, or principal, of their mort- 
gages, they saw it sacrificed at foreclosure sales, very frequently 
for much less than the amount of the mortgages, leaving them 
liable for a deficiency, the mortgagees being usually the pur- 
chasers. 



INVESTMENT AND SPECULATION 193 

Here we see speculation, none the less disastrous because of 
its being involved in real estate investments. 

The difference in results derived from an investment of any- 
kind that increased in value and income return would compare 
so favorably with one which depreciated in value that investors, 
when purchasing, should consider very carefully the future 
prospects of the property, whether real or personal, as well as 
its present and past condition. 

Very important, in this connection, is the personality of those 
in control of corporations, particularly manufacturing and min- 
ing companies, whose securities are invested in, for upon their 
good or bad management depend very largely, the amount of 
their dividends and the value of their stocks. 

In our railway history there have been very many instances 
where those in control of them have proved to be wreckers 
instead of conservators. They have been so designedly for 
their own personal profit, at the expense, of course, of their 
stockholders and bondholders. The long list of reorganizations 
and foreclosure sales tells a sad story of greed, chicanery and 
injustice, amounting to robbery. 

But legal restrictions have now greatly narrowed the field, 
which formerly existed, for abuses of power, and frauds on 
the rights of stock and bondholders, by railway managers and 
others controlling the majority of a corporation's stock. It is 
no longer possible to steal a railway, with all its equipment and 
assets, and bribe judges to assist in the proceeding, on the 
mere pretense of controlling a majority of its stock, acquired 
mainly through proxies, — many of these obtained by misrepre- 
sentation, and many more by actual forgery. 

It is reassuring to know that all the laws relating to railway 
and other corporations, passed during the last few years, tend 
to promote good management by forbidding dishonest practices, 
like rebating, and imposing more or less severe penalties for 
their violation. So, in this way, investors have been better 
secured and guarded in possession of their rights, than they 
were before. 

But, like the poor, some abuses and some bad or indifferent 



194 INVESTMENT AND SPECULATION 

management, in varying degrees, will be always with us, owing 
to speculative and other causes. So care and watchfulness are 
required to protect the investor's interests; and he should be 
quicker to sell out than he was to buy when he finds himself 
the holder of a stock or a bond that is going down hill, or that 
has an unpromising outlook. 

Just as eternal vigilance is the price of liberty this constant 
watchfulness on his part is necessary to safety. 

Investors must in no case trust entirely to Government super- 
vision, but use their own judgment, or else rely on the judg- 
ment of bankers, brokers, or others whose opinion is reliable, 
as to present and prospective values. Its true value determines 
how good or how bad an investment is. 

Most investors will not take the time or trouble to investigate 
the value of their investments, directly or indirectly, and hence 
they sometimes, if not often, make bad ones. Without proper 
discrimination, it is always easier to lose money than to make 
it in investing as well as in speculating. 

The stocks and bonds of corporations regularly publishing 
their gross and net earnings, and financial condition, should 
always be preferred by investors, for this publicity of accounts 
enables them to judge of their merits for themselves without 
trouble. 

At the same time it is a wise course for railway and other 
large corporations to pursue, whether compelled by law to so 
publish their condition, or not, as it improves their credit and 
strengthens confidence in their securities. Such publicity is 
therefore an important factor in favor of both sides, and no 
honestly conducted corporation should shrink from it. Cor- 
porations are recognizing this, and more and more willingly 
imparting information to their stockholders that they once with- 
held. 

They see that it is even more to their own interest than to 
that of investors to do so, owing to this enhancement of market 
prices for their securities and this encouragement of invest- 
ments, whereas a policy of secrecy would tend to lower prices 
and drive investors away. This publicity also promotes honest 



INVESTMENT AND SPECULATION 195 

methods and fair dealing by corporations, by keeping them in 
the daylight, and teaches, or at least reminds them, that hon- 
esty is the best policy, although policy is a very mean motive 
for honesty. 

It is gratifying to know that the commercial morality of this 
country has been materially raised since the exposure of abuses 
in the management of railways, life insurance companies and 
other large corporations, and the passage and enforcement of 
more stringent laws than we had before relating to corpora- 
tions. We have to thank President Roosevelt for much of this 
good work, and change for the better. 

The demoralizing prevalence of that insidious form of dis- 
honesty called Graft has, too, been very generally frowned 
upon and driven more and more out of sight, but it still flour- 
ishes where opportunity presents itself, although chiefly in 
holes and corners. 

As it invariably involves chicanery, it is destructive of self- 
respect, and a sort of greed unworthy of, and discreditable to, 
American citizens. Yet in official life — Federal, State and 
Municipal — it is, if not all pervading, too generally encoun- 
tered by contractors, place seekers and others in their efforts 
to exchange commodities, or work, for Federal, State or Mu- 
nicipal Government money. 

There should be no such itching palms, and no such extrava- 
gant habits of life as foster this craving to increase salaries 
on the part of Jacks in office, by taking, or filching other peo- 
ple's money away from them for implied influence or services; 
and often this Graft is really black-mail. 

If these officeholders and other graft-seeking employees 
valued money less and character more they would increase their 
own self-respect and raise our standard of business morality 
still higher. We need more of the simple life, and more econ- 
omy in living expenses than we have. With these we should 
not only have less grafting but fewer embezzlements, bank- 
ruptcies and suicides through money troubles. But investors 
in railway, industrial and life insurance corporations have 
gained greatly in security by the reforms already accomplished. 



196 INVESTMENT AND SPECULATION 

The history of investments is full of glaring contrasts. 
From small beginnings we have seen enormous gains, as in 
Standard Oil and the Astor, Goelet and other large real estate 
fortunes. We have seen them result from the invention and 
manufacture of the sewing machine and the Self Binding Har- 
vester, that superseded the sickle as a reaper. We have seen 
them in Commodore Vanderbilt's vast railway fortune, and our 
development of the steel trade, under a high tariff, that made 
colossal fortunes for Carnegie and other Pittsburg million- 
aires; and we have seen many great fortunes made with won- 
derful rapidity in many similar ways in this, our country of 
great opportunities. 

On the other hand we have seen, in the world at large, 
enormous investments entirely lost, as in the attempt to build 
the Panama canal by the French under DeLesseps, who had 
built the Suez Canal, and also as in the collapse of the first 
English railways under the regime of Hudson the Railway 
King, and the somewhat similar railway and other insolvencies 
in this country in the great panics of 1837, 1857, 1873 and 
1893. 

From these instances we may turn to the large fortunes made 
in the dry goods trade by A. T. Stewart, and Marshall Field, 
the head of the leading firm in Chicago, and the still larger 
fortunes made in Wall Street, from small beginnings, by Rus- 
sell Sage and Jay Gould, not to mention a number more who 
are still living. 

In banking, too, in Chicago, in its pioneer days, we saw 
that canny Scot, George Smith accumulate wealth that left him 
worth about eighty millions of dollars when he died, a lonely 
bachelor, in his room in a London Club, where he had lived 
frugally for many years after saying good-bye to America. 

All these men possessed the money-making faculty, but some 
of them probably acted in accordance with the advice of a cer- 
tain dying miser to his son, " Get money, my son, honestly if 
you can ; but get it anyhow ! " and with this parting inj unction 
he passed away. In him the ruling spirit was strong in death. 

It is interesting, and almost fascinating, to survey the field 



INVESTMENT AND SPECULATION 197 

of American investments in securities, so immense has it become. 
There are now 574,300 stockholders on the transfer books of 
sixty-five of the largest American corporations — 25 being rail- 
way and 40 industrial — whose total capitalization is $5,800,- 
000,000, against only 507,361 stockholders at the end of last 
year. The increase is due to the panic liquidation by large 
stockholders and the re-distribution of their holdings among 
the purchasers of odd lots. Thus the investing class has been 
largely increased. 

But, including all our railway and industrial corporations, 
the number of stockholders on their transfer books is estimated 
to be about 1,600,000, with the average holdings of these in 
railway stocks 119 shares, and in industrial stocks 88 shares. 
The wider distribution of the latter than of the former is mainly 
owing to the facilities the U. S. Steel corporation, and other in- 
dustrial companies, have afforded their employees for buying 
and carrying limited amounts of their own stocks, thus inter- 
esting them in their work through the acquisition of a proprie- 
tary interest, and lessening the liability to strikes. It is a step 
towards profit-sharing. 

Investors should regard a study of values, as absolutely 
necessary to safety, in buying stocks or bonds; first of all, 
consider the safety of an investment, and how far it would 
be able to withstand adverse circumstances and untoward 
events. An investor should not allow himself to be blinded 
in this respect by satisfactory, or even large, present dividends 
or interest. He should always have an eye to the future re- 
turns, and the key to future probabilities is to be found pri- 
marily in the fixed charges, and, subordinately, in the average 
cost of maintenance. 

If the fixed charges of a railway materially exceed one-half 
of the net earnings remaining for interest, dividends and im- 
provements, its securities can, under ordinary conditions, 
hardly be considered safe from the investment point of view, 
although generally speaking, there may be practically little or 
perhaps no danger of ultimate bankruptcy. 

The range of fixed charges in our large railways is very 



198 INVESTMENT AND SPECULATION 

wide. In the fiscal year 1905 those of the Northern Pacific 
were only 29 per cent, of the total net income, those of the 
Great Northern 26 per cent., and those of the Union Pacific 
SI, while the St. Paul's were 32 per cent., the Pennsylvania's 
38, the B. & O.'s 39, the Delaware & Hudson's 40, the Atchi- 
son's 42, the Illinois Central's 47, the New Haven's 48, the 
Reading's 45, the Louisville & Nashville's 54, the Missouri Pa- 
cific's 60, the New York Central's 64, the Erie's 66, the South- 
ern's 69, the Wabash's 80, and Rock Island's 83. 

The reason why the amount of the fixed charges is so im- 
portant for investors to consider is obvious in the bulwark of 
strength and protection that a low percentage of these affords 
to the securities and credit of a corporation. It is the best in- 
dication, almost amounting to a guarantee, that interest and 
dividends will be paid without interruption, even in periods of 
trade depression. 

On the other hand, a high percentage of fixed charges is a 
danger signal pointing to opposite results or possibilities. It 
exposes a railway company to serious risks whenever, as in 
hard times, there is a large falling off in its earnings. Not only 
does it then usually cause a reduction, or suspension of divi- 
dends, but, beyond a certain point, jeopardizes interest pay- 
ments, a default in which invariably involves a costly receiver- 
ship, unless some Harriman or Morgan can be found, as in the 
case of the Erie, to purchase the coupons for ulterior purposes. 

If, for illustration, to quote an extreme case the fixed charges 
of a railway were as high as 75 per cent, of the total net earn- 
ings, it would suffer, on a decline of 20 per cent, in its earn- 
ings, a shrinkage of 80 per cent, in its surplus for dividends, 
whereas if its fixed charges had been only 25 per cent, of its 
net earnings the shrinkage would have been only 26 per cent, 
in its surplus. 

But in the case of the few railway and other companies, that 
have large investment holdings of other stocks and bonds than 
their own, they are of course less dependent upon their traffic 
earnings than companies that have no such sources of income. 
Union Pacific is a conspicuous but exceptional instance of this 



INVESTMENT AND SPECULATION W9 

investment holding among the railways, as 4 per cent, of its 
annual 10 per cent, dividend comes from that source, the 
present market value of its stock investments being about $303,- 
300,000. No other railway has anything approaching such 
great resources of this kind, but New York Central stands next 
to it, and the Pennsylvania is the third largest holder of securi- 
ties issued by controlled or connecting companies. 

A speculator in stocks, bonds or commodities, even more than 
an investor, should be well equipped with information concern- 
ing them, and the more the better, but above all he should 
know how to successfully apply his knowledge in his actual 
operations. 

He should not merely be well informed as to values, but as 
to the mechanism of speculation and the modus operandi of the 
stock and other exchanges and the brokers belonging to them, 
in making transactions in stocks, bonds, cotton and grain. 

He should also keep himself well informed, up to date, as 
to home and foreign financial, commercial and political con- 
ditions, particularly as to the crops and the money and other 
markets, and be able to distinguish the wheat from the chaff 
in the day's news at a glance. He should have what journal- 
ists call a nose for news, and yet never be so much off his 
guard as to be carried away by a false report, or led even to 
follow a false scent to the extent of acting upon it. 

It is almost needless to say that the great mass of speculators, 
either in or out of Wall Street, are not thus well equipped. 
Most of them " go it blind " in their operations, and therefore 
it is not surprising that many of them lose money. But in 
these days of rapid movement this equipment is necessary to 
success, and the stock, grain and cotton speculators' range of 
vision should embrace the whole world. 

Thus, with his knowledge of everything transpiring calcu- 
lated to affect real values, or market prices, he can form opin- 
ions for himself as to what course he should pursue in buying 
or selling. 

All countries have now been brought so near each other by 
ocean cables and wireless telegraphy that the news of one is 



200 INVESTMENT AND SPECULATION 

the news of all almost simultaneously, and this news being 
published broadcast through the press everywhere, all nations, 
and their remotest possessions, are made kin, and placed on a 
par in their knowledge of what is going on in the world, in 
finances and trade, as well as everything else of importance. 

New York's closing market prices for stocks and cotton, and 
Chicago's for grain, are published in the English and other 
European daily newspapers as promptly as in our own, and 
we are equally quick to publish London and Liverpool prices. 
This bringing of the nations together is conducive to stability 
in international finance, and to the equalization of market prices 
for both stocks and commodities, and therefore of universal 
benefit, especially in the promotion of international trade and 
good feeling. 

It is likewise an educating force, and a protection against 
fraud and deception through the publicity it involves. It has 
made people more wide awake and alert, and the marketing 
of spurious and worthless mining and other industrial stocks 
much more difficult than it used to be. In other words, in- 
vestors on both sides of the Atlantic have become less gullible 
than they were, and the schemes of swindling promoters inspire 
distrust instead of the old desire to invest. 

The invitation of the spider to step into its parlor is no longer 
generally accepted by the flies. Many of them have had their 
wings singed in the past, and a burnt child dreads the fire. 
Investors have been educated to be wary. This is a good asset 
for them. Forewarned, forearmed. 

Similar caution is being shown by the outside public towards 
the stock market. The field that used to be largely occupied 
by the so-called lambs in an active bull market is now filled 
with professional speculators, who are as quick to sell as to buy, 
and who may sometimes change from bull to bear, and vice 
versa, several times a day. 

The semi-professional speculators, who frequent the office 
of their brokers more or less regularly, almost invariably trade 
on a deposit in part payment, which is usually ten per cent, on 
the par of $100 a share. That is, they borrow the remaining 



INVESTMENT AND SPECULATION 201 

ninety per cent, from their brokers. What essential difference 
is there between this, and their buying and paying cash for 
stocks, and their then borrowing ninety per cent, of their 
market value on them from a bank or trust company? 

Yet the one transaction has been called gambling by its 
traducers, while the other is called an investment. But specu- 
lation on the stock exchange, and in the markets for speculative 
commodities is not gambling. It is no more gambling than 
trading in any other kind of property on which money has to 
be borrowed as collateral security, or through the medium of 
commercial paper. 

Speculation may, however, like everything else, be carried 
to excess, and speculative methods on the stock exchange may 
be abused, as in some recent cases, and also whenever stocks are 
" washed," a practice which is forbidden by the rules of the 
board, but of which it is usually very difficult to obtain evidence. 
In speculating, the man who contents himself with moderate 
profits, and who has the courage to take small losses when he 
sees that he is wrong, will generally be more successful than 
one who holds out for inordinate profits and is willing to run 
the risk of heavy losses. Like vaulting ambition that overleaps 
itself and falls on the other side, he may overstay his market 
and convert heavy gains into disastrous reverses. 

The tendency of many speculators is to overtrade. They 
want to get rich too quickly, and skate on thin ice in the 
shape of their deposits, or margins, to protect their opera- 
tions. They, too often, put all their money in one venture, 
so they are unable to average, or reverse, or " double up," and 
are wiped out if the market goes much against them. 

In proportion to the smallness of their cash resources on 
deposit, their risk of loss is increased. That is why the bucket 
shops are fatal to their customers who put up from one to five 
per cent. If a speculator has only two or three thousand 
dollars available for deposit with his brokers, as the so-called 
margin, he should never start a new operation with more than 
one hundred shares of a stock whose par is $100, or 200 shares 
of a half stock like Reading and Pennsylvania, the par of 



202 INVESTMENT AND SPECULATION 

whose shares is $50. Then he is in a position to average, or 
reverse, if the market goes against him; and in nine cases out 
of ten he will do better, in the long run, than the man who 
takes big risks, which often lead to big losses. Hence pyra- 
miding on paper profits should always be avoided. It is pro- 
lific of disaster and foolhardy, but many sometimes succeed 
through mere good luck. 

A speculator with large paper profits on his holdings should 
protect them by stop loss orders at prices not far from the 
current quotations, so as to guard against losing them by some 
sudden and violent turn of the market against him. More- 
over, every operator should rely absolutely on his own judg- 
ment, and never act upon chart theories or upon tips, or points, 
from others, to buy or sell a stock until he has submitted them 
to the crucible of that judgment. While it is a good general 
rule to take small losses and let profits run, there are exceptions 
to it calling for individual judgment. Circumstances alter 
cases. 

Other conditions being equal, there is less risk to the specu- 
lator in buying dividend paying stocks than non-dividend pay- 
ers, for the dividends pay more or less of the cost of carrying, 
which is usually six per cent, per annum. He is always safe 
in buying good dividend paying stocks when cheap. On a 
" short " sale the dividends, of course, count against him. Con- 
sequently it is the most dangerous form of speculation. But 
if he buys 10,000 bushels of wheat, or corn, the equivalent of 
100 shares of stock, storage charges and insurance count against 
him, and he is dependent upon a rise in price to cover the fixed 
charges. 

The investor when he purchases hopes not only to get interest 
on the money he invests but to have what he buys increase in 
value. So his motive is the same as the speculators, the dif- 
ference between them being that, in the first instance, the in- 
vestor pays outright for what he buys. This is why the divid- 
ing line between investment and speculation is so narrow. Both 
try to buy as low, and sell as high, as they can, for there are 



INVESTMENT AND SPECULATION 203. 

few investors who do not make changes in their investments 
from time to time. 

Speculation should be regarded as a business of itself , hke 
insurance, or manufacturing; a business calling for serious con- 
sideration and watchfulness. But comparatively few so regard 
it, or, by study and sound reasoning, prepare themselves to form 
an intelligent judgment as to what they do, or should do. 

I once knew of a speculator from the country who went 
blindly into operations in Wall Street, and by sheer good luck 
made more money by a sharp rise in Pacific Mail than he had 
lost in other stocks. That made him think well enough of the 
stock to wish to learn more about it, and, turning to another 
speculator, he asked, " Where does that Pacific Mail road run ? " 

He didn't even know that he was talking about a line of 
steamers, and, in his general equipment, he had many dupli- 
cates. 

Many speculators, and particularly the outside pubHc, are 
most inclined to buy at the top — that is, when the market is 
highest, and being boomed on an active bull movement, when 
they ought to be selling; and they are equally prone to sell 
at the bottom, or when the market is being hammered and most 
severely depressed. Then it always looks as if it were going 
lower, just as when it is being boomed by manipulation it looks 
like going higher. So they get caught at both the top and 
the bottom — the two horns of a fatal dilemma. 

They are influenced by excessive fears in thus selling, and 
by temerity, or at least undue hopefulness, in buying. An 
excess of confidence should be as much guarded against by 
the speculator as fear or depression; and overtrading is the 
common cause of the fear that leads him to sell out at the bot- 
tom. 

If a man is in imminent danger of losing all that he has he 
is very liable to be fearsome, but if he has ample means in 
reserve, and can afford to lose what he has at stake in the 
hands of his brokers, there is less likelihood of his worrying. 
He can then operate on his judgment, not on his fears. A 



20i INVESTMENT AND SPECULATION 

speculator can never do himself justice if he is governed, or 
even influenced, by anxiety, or his fear of losses. Then, with 
good judgment, he is generally successful. Those who buy in 
anticipation of increased dividends, or other events that have 
long been generally looked for, are liable to be disappointed, 
owing to the invariable Wall Street impulse to discount them 
by buying in advance, and then selling on the good news when 
it comes out. This selling sometimes causes a decline instead 
of the expected advance. In such cases the bears are always 
ready to help the decline by short sales. The stock market is 
always anticipating and discounting the future of trade and 
other conditions, and often goes contrary to current events. 
Therefore the early bird catches the worm. 

Few besides professional speculators make good bears, or 
are willing to sell short, and many of the professionals never 
leave the bull side. Most outsiders hardly understand what 
" selling short " is. But its mechanism is exactly the reverse 
of " going long." Stocks are sold in the usual way without 
the seller having any to sell, and his broker borrows them, in 
the open market, for delivery, and returns them to the lender 
when his customer, the seller, buys to cover his contract. He 
may do this at a profit, if the stocks decline, or at a loss if 
they advance. 

In thus selling " short " he has of course been operating for 
a fall, just as a bull, in buying, operates for a rise, and the 
broker's commission and the customer's deposit with him are 
the same in either case. On a weak market the bears are al- 
ways active, helping it down by their sales, but on a rising mar- 
ket most of them are quick to cover. 

A squeeze of the shorts, by the bull leaders bidding prices 
up on them, always causes a rush to cover regardless of profit 
or loss. But some of the " shorts," who have plenty of money 
and nerve, sell more on the squeeze to average. The bear side, 
however, is never popular, although all the large operators of 
Wall Street have been bulls and bears alternately — bears 
when they wanted to get the market down in order to buy, and 
bulls when they wanted to get it up to sell. 



INVESTMENT AND SPECULATION 205 

This involves extensive and persistent manipulation by the 
speculative capitalists, and their enormous resources, and bank- 
ing facilities, give them, at times, virtual control of the course 
of the market. This being the case, it is easy to see how sure 
they are of adding enormously to their millions in the long run, 
although, when they are heavily loaded with stocks, they may 
suffer heavy losses, at least temporarily, through such events 
as the San Francisco earthquake and " the rich man's panic ' of 
1907. These men represent a herculean speculative money 
power in Wall Street and other great money centres, but their 
operations are generally a dead secret to all except their brok- 
ers. 

When United States Steel common went down to ten dollars 
a share, and the street was afraid of it, they bought all that 
was offered on the decline, thus replacing the stock they had 
sold when it was highest and paying four per cent, dividends. 
There was a big bonanza for them in this stock alone. That 
is one way in which the rich grow richer — a hundred millions 
or so of profits divided among a few friends ! It shows the 
power of money in the stock market. The longest purse wins 
in Wall Street as well as on the battle field. 

When money is cheap and abundant, and investors are not 
selling, this small coterie of large capitalists can easily bid 
stocks up to almost any prices they please, without any buying 
by the outside public to assist them, as they have done all this 
year. But now that they have got them up to high figures, 
and sold a good many of them, they would very much like 
to have the public take the rest off their hands. Their original 
holdings were so enormous that they still have a heavy load to 
carry. 

The public, however, does not seem to be very accommodat- 
ing in this respect. So their programme is to continue keeping 
stocks active, and putting them higher, till the public can no 
longer resist the temptation to rush in and buy. At the same 
time they look forward to such an improvement in trade as will 
largely increase railway and industrial earnings and so increase 
the value of the stocks they have not yet distributed. They 



206 INVESTMENT AND SPECULATION 

will in all probability succeed finally, for they can afford to 
wait, and meanwhile they will have no difficulty in churning the 
market so as to make something more than interest on the 
money cost of their holdings. 

Most operators expect too much from speculation, and are 
not contented with moderate returns on the capital they employ. 
They are impatient, and by taking big risks in the hope of 
making big profits, grasp at shadows and often lose the sub- 
stance — their money. Patience is a virtue, especially in the 
stock market. They also too often buy on an over-bought 
market, and sell on an over-sold market, not being keen enough 
to perceive the technical difference between the two conditions. 
Hence they lose in both cases. On an over-sold market short 
sales are always extra hazardous. The bull manipulators have 
a sure thing for themselves when they have a large short in- 
terest to squeeze. It creates, for the time being, as good a 
demand for stocks as if outside investors were buying. 

An over-bought market always includes many who are hold- 
ing on for the top prices of a rise, instead of being willing to 
take good profits, and let others make the rest. Consequently 
they over-stay their market, and lose much of what they had 
made — on paper — by having to sell on a decline. 

It is the same with bears, who refusing to cover at a good 
profit, when they can, have, later, to climb for their stocks on 
a rising market. 

Large operators buy on a scale down when they wish to ac- 
quire a line of any particular stock; but in selling they feed 
the market with what it will take without breaking. Some- 
times in a bull movement, however, they engineer a big break 
for the purpose of buying back, at a good profit, stocks they 
had sold, as well as to create a large short interest. Then they 
turn round and bid prices up again on the shorts, so forcing 
them to cover at a loss. 

To sum up, speculation is a science, and both speculators 
and investors are engaged in speculation, although in different 
degrees. Both have for their object the profitable employment 



INVESTMENT AND SPECULATION 207 

of money by the purchase of property, real or personal. But 
in the case of the bear, as distinguished from the bull specula- 
tor, he reverses ordinary conditions, and sells before he buys, 
hoping to buy for less than he sold. That is what, at first, 
puzzles some of the raw recruits — how a man can sell what 
he hasn't got. 

There is this difference between the speculator and gambler. 
The speculator operates upon judgment, which in turn is based 
upon a careful study of all the numerous and complex influ- 
ences affecting values, such, for instance, as supply and de- 
mand, crops, credits, weather, manipulation, international move- 
ments, politics and the thousand and one factors which govern 
the course of prices. He who most accurately foresees the 
outcome of such conflicting elements is the most successful 
operator. 

The gambler, on the other hand, is one who at best operates 
upon nothing more than the laws of chance; and even of these 
he usually has but a limited knowledge, and is as likely to 
win on the flip of a coin or the turning of a wheel as by watch- 
ing the ticker. 

The speculator acts upon facts; the gambler upon chance. 

The speculator performs a useful function, is a balance 
wheel, buys when every one else wishes to sell, or sells when 
others are buying; thus tending to restore equilibrium, to pre- 
vent extreme fluctuations and to anticipate the effects of sur- 
plus or deficiency. At times the speculator's operations may 
be harmful, especially when, like many other good things, they 
are carried to excess. But in the long run he is a benefit to 
the community, contrary to the opinion of many well-meaning 
but ignorant people. The gambler, on the contrary, is a pos- 
itive injury to society. He performs no useful service, and 
is justly disliked by all interested in legitimate business. 

Neither investors nor speculators should consider it a formid- 
able or even a difficult task to acquire a good knowledge of 
values. If not exactly " as easy as rolling off a log," it has 
become a simple matter, especially in the case of railways, 



208 INVESTMENT AND SPECULATION 

owing to recent acts of Congress, requiring uniformity in their 
reports, and strict supervision of their bookkeeping methods by 
the Interstate Commerce Commission. 

The act of June, 1906, which took effect on July 1, 1907, 
requires it to prescribe the forms of any and all accounts, 
records and memoranda to be kept by carriers including the 
movement of traffic, as well as the receipts and expenditures of 
money, the Commission at all times to have access to these; 
and the keeping of any other accounts is unlawful. This uni- 
formity never existed before. 

In making comparisons of the earning power of different 
railways, including their varying traffic resources, and physical 
and financial condition, allowance must be made for the geo- 
graphical and other local and special conditions affecting each 
particular one. But, without going into the details of their 
reports as to physical features, depreciation of road-bed and 
equipment, ballast, rails, grade crossings, curvatures, gradients, 
bridges, culverts and other engineering matters, the strength 
or weakness of a railway company can be seen by a close 
scrutiny of its balance sheet, under the new order of things. 

Formerly the balance sheet seemed designed, like speech in 
diplomacy, and some other little talks and trades, to conceal 
the truth, but under the new law, it is complete, or should be, 
and tells the investor, or the speculator, just what he wants 
to know as to the true position of the property. We see in 
our Interstate Commerce legislation progress in the right 
direction, for it practically prevents fraud and unjust discrim- 
ination, and protects investors in railway securities as they 
were never protected in the days that are no more. For this, 
particularly, they have good reason to thank Congress and 
President Roosevelt. 

I, for one, cordially welcome the investigation into the specu- 
lative methods of Wall Street and the New York Stock Ex- 
change by the committee of distinguished citizens appointed by 
Gov. Hughes. I feel sure it is equally welcome to the Stock 
Exchange, which has furnished the committee with every facil- 



INVESTMENT AND SPECULATION 209 

ity for learning everything connected with its business without 
the slightest reservation, and the members of the Stock Ex- 
change individually all stand ready to give any information or 
explanations desired, and to aid the committee in every way 
possible. The more thorough and searching its investigation, 
the better will be the light in which Wall Street and the Stock 
Exchange will appear, for it will be found that honor and 
honesty and fair dealing are the foundation of its business, and 
that any wrongdoing is in violation of the rules of the Stock 
Exchange and contrary to the practice of its members. These 
violations when discovered are promptly punished by suspen- 
sion or expulsion from the Stock Exchange, and that body, in- 
cluding all reputable Wall Street, is always glad to get rid of 
its black sheep. It would also like to prevent speculative cap- 
italists from abusing the privileges of the Stock Exchange 
through that kind of manipulation which is called " washing " 
or matched orders given to different brokers; but the rule is 
very hard to enforce owing to the difficulty of discovering the 
offenders. There is, however, no more honorable body of men 
in the world than those composing the membership of the New 
York Stock Exchange, and I am proud of being one of its 
oldest members. It would be impossible for any member of 
the Exchange to do business on a large scale, as so many are 
able to do, with large and expensive establishments to conduct 
their business if they did not do it on correct and honest prin- 
ciples. If they were even suspected of doing business dishon- 
estly they would soon find their expenses exceed their income 
and would be driven to the wall. No business on a very large 
scale can be conducted nowadays unless it is done by people 
considered strictly honest in their methods and in giving their 
clients prompt and straightforward service. The moral tone 
of Wall Street has continually improved, year by year, and 
all first-class brokers and bankers favor any action that will 
prove this fact to the general public. Every shyster who at- 
tempts to perpetrate a fraud and gives his occupation as a 
broker reflects on Wall Street, in spite of the fact that Wall 



210 INVESTMENT AND SPECULATION 

Street never heard of him. The committee is composed of 
honorable, high-toned gentlemen, who will be fearless in their 
report to the Governor, and I cannot see any danger to the 
business of legitimate brokerage houses from their investiga- 
tion. 



THE AMERICAN MERCANTILE MARINE, ITS CONDI- 
TION, IMPROVEMENT AND SAFETY, AND THE 
DUTY OF CONGRESS AS TO FOREIGN-BUILT 
SHIPS, AND THE TARIFF 

Address delivered at the " Merchant Marine Congress," held at the 
Metropolitan Temple, 14th St. and Tth Ave., New' York, Thursday 
evening, Feb. 4, 1909. 

IN thanking you for the honor and distinction of being 
invited to address the Merchant Marine Congress, I desire, 
as well, to congratulate you upon the convening of the 
Congress and to compliment Dr. Hill for his great and patriotic 
enterprise and zeal in behalf of so excellent and worthy a 
cause. 

The analysis and public discussion of any question — be it 
economic or sociological in its nature — always brings us more 
closely to conditions and the nature of needed reforms that 
require our attention than any other method that could be em- 
ployed, and, I am sure that Dr. Hill in inaugurating this Con- 
gress, has not only earned the gratitude of our citizens, but 
has taken a step which will lead to results of mammoth ben- 
efit to our country. 

It is true, without question, that there is no subject before 
the American people to-day more deserving of weighty and 
patriotic consideration than that of the American Merchant 
Marine. 

At one time occupying a position of supremacy, it has de- 
clined to a position of comparative insignificance, but it is, in- 
deed, encouraging to note that at no time since the practical 
disappearance of the flag from the high seas has there been a 
greater or more growing demand that the Merchant Marine be 
revived and restored. 

211 



212 OUR MERCANTILE MARINE 

As you have already heard from the distinguished gentlemen 
— Members of Congress — who have already addressed this 
Convention, measures have been prepared and are before the 
House and Senate, for prompt and proper consideration, look- 
ing to the restoration of our old-time name and fame — our 
ancient power and glory as merchantmen upon the high seas 
of the world. 

When we first pause to give earnest thought to the question 
now before us, we are at once astounded at the condition which 
confronts us. Here is our grand republic, whose growth and 
development in many respects have aroused the wonder, admira- 
tion and respect of all the world, while at the same time, its 
Merchant Marine has retrograded steadily instead of advancing 
and, to-day, presents a most humiliating spectacle, unworthy 
of the name and fame of our country. 

In the report of the Commission of Navigation it is shown 
that only about nine per cent, of the imports and exports of 
the United States are now being carried in vessels flying the 
American flag. In 1826, the amount carried was ninety-two 
per cent. 

Alas ! How have the mighty fallen ! 

A careful investigation made recently disclosed the fact that, 
of 423 steamships sailing out of the harbor of New York for 
foreign ports, only 28 (or about seven per cent.), carried the 
American flag. 

Two hundred and sixty-five sailed for European ports, only 
six of which were built in American yards. Seventy-one were 
bound for ports in Cuba, the West Indies and Mexico, but only 
a paltry twenty-two were of American registry, notwithstanding 
that by reason of their geographical proximity, the carrying 
trade of these countries should naturally belong to the United 
States. 

In a late report it was shown that during a recent year, of 
ninety-two cargoes of wheat exported from Tacomah, only two 
small cargoes of 10,000 bushels were carried in American ves- 
sels. 

The comparative insignificance of the American carrying 



NO GOVERNMENT SUBSIDIES 213 

trade can be shown by numerous illustrations of like character. 

Hon. John Barrett, as Minister of the United States to Pan- 
ama, made the statement before the Merchant Marine Commis- 
sion at Chicago, that in the course of a journey around the 
world, he travelled 75,000 miles, including side trips, without 
seeing a single large American merchant vessel, engaged in 
inter-ocean traffic, although he saw in every port visited the, 
flags of England, France, Germany and Japan. 

In the vast success and expansion of our splendid railroad 
and manufacturing industries, which have added glory and 
lustre to our country's name, it seems paradoxical that what 
was once a great interest in our land for many years — the 
Merchant Marine — has had no share or part whatsoever, and 
stands as the butt of ridicule and wears the badge of discredit 
before the other nations of the world. 

Unless it be Russia, I do not believe that any other nation 
is so woefully behind the times in this respect as is the United 
States. 

It must seem strange, when we reflect that while we aspire 
to mercantile and marine greatness, yet we allow nine-tenths of 
our over-sea transportation to depend upon our foreign rivals. 

In 1830 the proportion of American commerce carried in 
American ships was 89 per cent.; in 1840 it was 82 per cent.; 
in 1850 72 per cent.; in I860 66 per cent.; in 1870, 35 per 
cent.; in 1880 17 per cent; in 1890 12 per cent.; in 1900 about 
9 per cent. 

The American Merchant Tonnage registered for foreign trade 
in 1900 was 836,229, with our population then at 75,000,000. 

When our country had only a population of 7/>00,000, away 
back in 1810, we registered a tonnage of 981,019. 

Just think of it ! What American within the sound of my 
voice does not feel the flush of shame, when he hears the figures 
of his country's maritime fall and debasement? 

I am here, my friends, upon this occasion, to voice the public 
sentiment of the people of this, the greatest city of the world, 
that this deplorable state of things be remedied. 

The people of the United States owe it to themselves as a 



214 OUR MERCANTILE MARINE 

great commercial nation, to build up the American Mercantile 
Marine, and they have also a patriotic duty to perform in the 
furtherance and accomplishment of this desirable result. Its 
present insignificance is almost a national reproach and dis- 
grace to us. 

American shipping interests should, however, be built up by 
wise legislation and good, sound business methods, and not 
by Government subsidies. To these, as a citizen, I am opposed, 
as subsidies would be a tax upon the people, for which they 
would receive no fair equivalent. Moreover, instead of de- 
veloping our Merchant Marine on a basis of independence, self- 
reliance and equality in competition for freight and passenger 
traffic, subsidies would dwarf enterprise and check improve- 
ment among the subsidized. Steamship companies would, as 
Government pensioners, lose that incentive to betterment, which 
should actuate them, while discouraging and placing at a dis- 
advantage, those not subsidized. Our laws should place all 
American shipping on a perfect equality, for this conduces to 
that honest competition which is the life of trade. 

It remains, however, for Congress to remove the handicap 
which it placed on American shipping at the time of the Civil 
War, by forbidding the transfer of foreign-built ships to 
American registry even when owned by Americans. 

Under this law the shipping interests of other countries — 
led by England, France and Germany — have thrived enor- 
mously, and practically at our expense. If statistics were ob- 
tainable as to the amount of freight and passenger money 
earned annually by foreign vessels, in their trade with this 
country, it would seem colossal; and all this money goes to 
foreigners, as under our present laws there is no inducement 
for Americans to buy foreign-built ships. 

This practical embargo should be promptly superseded by a 
law permitting foreign-built ships to receive registers here when 
owned by Americans. Then Americans would buy foreign- 
built ships, and these, with American registers, would soon be 
flying the American flag all over the world. Americans would 
thus share largely in the carrying trade of the world. 



WIRELESS TELEGRAPHY 215 

This discussion of our shipping problem naturally leads me 
to glance at the thrilling part that wireless telegraphy played 
in that great tragedy of the sea — the shipwreck of the Re- 
public. It showed the vast importance of the discovery and 
application of that wireless science in contributing to the 
safety of ships, and their passengers, at sea. 

Had the Republic not been equipped with the Marconi sys- 
tem of wireless telegraphy, which enabled John Binns, her 
heroic wireless operator, to promptly flash the C. Q. D. sig- 
nals of distress through the air in all directions, no help might 
have come to the helpless ship in the thick fog that shut her 
from view, till she sank with all on board. Let us bear that 
terrible possibility in mind. 

As it was, the Republic's C. Q. D. wireless messages flew to 
the Marconi wireless stations ashore, and to the Marconi wire- 
less system's ships passing within hundreds of miles, while sub- 
marine bells assisted with their distress signals, and quickly 
brought vessels to the rescue. Hence the passengers and crew 
were all saved as the sea was smooth, by life-boat transfer to 
the Florida and later to the Baltic, except those killed in the 
collision. So a far greater disaster in loss of life may have 
been averted, and if the sea had been rough, life-boats would 
have been swamped. 

The efficiency of wireless telegraphy, and its supreme im- 
portance, having been thus conspicuously and conclusively dis- 
played, as never before, it is obvious that all sea-going passen- 
ger ships should be equipped with it under a uniform system 
that all could read; and Congress should promptly pass a bill 
making this compulsory on all such ships leaving our ports, 
whatever their nationality. Equipment with the submarine bell 
— a more recent invention of great value — should also be 
required. It acts on the telephone principle from ship to 
ship. 

To develop our shipping interests and make the American 
Mercantile Marine what it ought to be, let me say that the 
tariff, particularly on materials entering into shipbuilding 
should be lowered and American registers given to foreign- 



216 OUR MERCANTILE MARINE 

built vessels acquired by Americans under certain proper re- 
strictions and conditions, when applied for. 

Meanwhile, however, all steamship companies carrying pas- 
sengers should turn their attention to making such improve- 
ments in the equipment and internal construction of their ships 
as are calculated to increase their safety. The reduction of 
cargo carrying capacity should not be allowed to interfere with 
these. Congress, too, should make these improvements specific 
and mandatory. 

Water-tight compartments, in particular, should be made 
much stronger than they are by double bulkheads and the 
rule, too often relaxed, or neglected, to keep them closed should 
be strictly enforced. If those of the Republic had been 
stronger they would probably, if properly closed when she 
was rammed amidships, have kept her afloat till she had been 
towed to port. They stood the strain upon them for thirty- 
six hours, and then gave way. 

Moreover, in large ships, auxiliary pumps and boilers, for 
emergencies, should be provided, in a separate compartment, 
and quicker methods of manning and lowering life-boats from 
the davits should be adopted. The reports say that it took 
more than five minutes for the sailors to free each one of the 
Republic's life-boats from the davits before anyone could enter 
a boat preparatory to its being lowered. The time thus lost 
might be fatal on a sinking ship. 

There ought to be a way of doing this work as quickly as 
horses are harnessed to fire engines in our engine houses and 
an apparatus for accomplishing it — that is, a davit that swings 
quickly outboard — has been offered to steamship companies, 
but very few of them have adopted it as yet, the old style of 
lashing and unlashing life-boats being considered satisfactory. 
But is it? The old method was found wanting just as the bulk- 
heads were, and just as the uselessness of all the ship's machin- 
ery was demonstrated after her engine room was flooded, and 
her boiler fires put out. The engine room was her vital part, 
and that ought to be protected better than it was. The lesson 
should not be lost in the construction of new ships. The en- 



PREVENTION OF DISASTER 217 

gine room should be shielded by armor plate. Congress should 
also legislate as to these matters. 

When in the light of this disaster, these and other improve- 
ments making for greater safety are suggested to directors of 
the large steamship companies, they say that careful considera- 
tion is being given to them, but that there is in these times of 
trade depression nothing to encourage them to undertake any- 
thing new that would add materially to their necessary expenses 
or reduce their earning capacity. 

They point to the very heavy falling off in immigration to 
this country since the panic of 1907, and to the large decrease 
in our imports and exports since that time involving low 
rates of freight with no present sign of business increasing. 

They might add that this trade depression is about as great 
in Europe as here, so much has our panic affected the rest of 
the world, and that more than 1,500,000 tons of shipping 
are laid up in the ports of the world for want of employment, 
and, in consequence, freights all over the world are lower than 
they ever were before. Not only this, but steamers in good 
condition and not many years in service have been sold for 
about half what they cost, while new ones have been dis- 
posed of at a heavy loss to their builders, the market for both 
new and second-hand vessels being overstocked. 

New steamers that were sold in the United Kingdom a few 
years ago for $240,000 to $250,000 can now be built there for 
$150,000 to $160,000, and smaller or larger ships in proportion, 
owing to builders and engineers being very short of work and 
willing to build new tonnage, in some instances below actual 
cost, in order to keep their works running. These prices were 
never lower in the modern history of the shipping trade. 

This state of things is leading to the breaking up of steamers, 
and it is estimated that of the 1,500,000 tons of idle shipping 
in the world, two-thirds, including of course the oldest and 
most obsolete types, will be broken up. 

In verification of these general statements, I find that in 
London, Lloyds' returns show the amount of tonnage registered 
in the United Kingdom in the first ten months of 1908 to have 



218 OUR MERCANTILE MARINE 

been only 135,400 tons, or 331,000 tons less than in the same 
months last year, and 520,000 tons less than in these months 
in 1906. On the 1st of November, 1908, the tonnage under 
construction was only 733,378 tons, against 1,080,087 tons at 
the same time in 1907 and 1,264,767 tons in 1906. 

As Lloyds is the highest statistical authority for the mer- 
cantile marine, in the world, these figures give a true reflec- 
tion of the prevailing depression in shipping interests, and 
what is true of the United Kingdom applies equally to this 
and other countries. These conditions may afford us some 
consolation for being so far out of the swim. 

But the night is darkest when the dawn is nearest, and 
business of all kinds will slowly improve, including that of 
the mercantile marine, the world over. Business depression 
however, should not even temporarily be allowed to prevent the 
ocean steamship companies from adopting and doing whatever 
is shown to add to the safety of a ship and her passengers. 
The public has a right to demand that the experience of this 
last great disaster at sea, and what it suggests in several re- 
spects, should be promptly utilized by the adoption of such 
improvements as double bulkheads, auxiliary engines and 
boilers, and a quicker method of handling life-boats, in ad- 
dition to the universal use of a uniform system of wireless 
telegraphy and submarine bells on all sea-going passenger 
ships. 

There should also be a more rigid Government inspection 
than hitherto of both foreign and American passenger steamers 
in our ports, to enforce compliance with existing laws and 
whatever new provisions Congress may enact to add to the 
safety of the mercantile marine, and all who go down to the 
sea in ships. 

The present period of low prices and abundant labor, is a 
good time for us to begin to lay the foundation for a new and 
prosperous era — if not a boom — in American mercantile ship- 
ping, so that our own people, instead of foreigners, may reap 
the profits of our carrying trade, and that our flag may, on 
the messengers of commerce, circle the world, and float on 



OUR MERCANTILE MARINE 219 

every sea. The duty of Congress in this regard being plain, 
the people should demand its performance. 

New York is particularly interested in bringing about this 
great change for the better, as it represents 70 per cent, of 
the imports and exports of the United States. 

Now, gentlemen, having assured you of my heartiest sym- 
pathy with your object of restoring our Merchant Marine, 
permit me to say a few words as to the causes of present con- 
ditions, and then as to what I conceive to be the true and only 
remedy. 

The decline in American shipping became most pronounced 
after the Civil War; not because of the destruction of our ships 
by Confederate cruisers, as has frequently been asserted, but 
because of radical changes in economic conditions. As soon 
as peace was declared this country started upon an era of 
tremendous internal development. All our energy was turned 
in that direction, and American capital flowed freely into rail- 
road enterprises, while many of the men who had previously 
made fortunes in shipping now turned their attention to the 
tempting opportunities offered in developing our railroad sys- 
tem and our natural resources. 

Thus it came to pass that both capital and labor found much 
more profitable employment ashore than afloat; and while we 
were bending all our energies towards building railroads, Great 
Britain was equally energetic in building ships. 

In each case the development was perfectly natural; our 
opportunity being in the development of our unequalled natural 
resources; and England's opportunity being in the develop- 
ment of her enormous commerce between her colonies and 
other great nations. 

To some extent the decline of our Merchant Marine was 
accelerated by the passing of the wooden ship and the introduc- 
tion of iron vessels for which England at that time had better 
opportunities and methods of construction than ourselves. 
Other countries sought to compete with Great Britain — 
France, Germany and the United States — but none succeeded. 
Subsidies were tried on a liberal scale by each country, but 



220 OUR MERCANTILE MARINE 

even these expedients failed to check British progress, mainly 
because she built the best ships at the lowest prices, ran them 
at the lowest cost, and, above all, controlled the commerce with 
which to fill them. This she did upon a purely business basis; 
for, mark it, while a few of her best ships did receive liberal 
postal and admiralty payments, more than ninety per cent, of 
her ships never received a dollar of subsidy, and yet com- 
peted successfully with ships, British and foreign, that did 
receive subsidies in various forms. In certain cases Great 
Britain paid liberally for frequency of service and extra speed 
for the purpose of securing quick and regular communication 
with her distant empire, for political reasons, just as our 
Government subsidized the Pacific railroads years ago for the 
purpose of binding the Pacific coast more firmly to the Union. 

But in every case the payment was made for services ren- 
dered and not with the deliberate intent of developing her 
Merchant Marine, though that of course benefited. 

The truth is that we in the United States are very seriously 
[handicapped in this matter of competition on the ocean, be- 
cause the principles of protection cannot be made to work at 
sea, no matter how skilfully or rigidly drawn. Unfortunately, 
American ships cost more to build and to run than any others 
in the world. This, gentlemen, is the real reason why our 
Merchant Marine is disappearing; this is the crux of the whole 
question; this is where we must all begin to look for the true 
remedy. As already stated, I am most heartily with you in 
desiring to see the restoration of our position on the sea; arid 
I frequently feel a keen sense of shame when I see that with all 
our boasted energy and enterprise we are so far in the rear. 

And now that we know the reason, the next question is, 
Where should we find the remedy? Certainly not in the ex- 
pedients of subsidies which have been tried over and over again 
without success, and which are in opposition to the will and 
independent spirit of our people. 

Moreover, wherever tried, they have tended to monopoly 
and inefficiency. In seeking for a remedy it is perhaps well 
to consider upon what basis the success of our rivals has been 



ENGLAND BUYS IN CHEAPEST MARKET 221 

founded. How did they succeed? Simply by following sound 
business methods. We must secure both our ships and our sail- 
ors on the best terms possible. 

That is the foundation of England's extraordinary success. 
She buys her ships, her supplies and her labor in the cheapest 
market. So must we. If a ship costs $1,000,000 here and 
$750,000 abroad we must buy abroad. If Americans don't 
want to go to sea because they can find a more profitable job 
ashore, let them do so, and let us employ sailors wherever we 
can get them. 

We can never succeed in establishing any Merchant Marine 
until we cease depending upon crutches, and get down to the 
sane^ sound and businesslike methods which have brought suc- 
cess to our rivals. 

Right here there is one point that I should like to impress 
upon you, because it is one that is generally overlooked in 
spite of its monstrous injustice. 

An American can buy anything in this world that he wishes 
and bring it home, provided he pays the duty, except a ship; 
that is the only thing on earth that he cannot buy and bring 
under the protection of his flag. What is the consequence of 
this stupid piece of legislation? Why, there are hundreds of 
vessels owned and operated to-day by Americans, and Ameri- 
can capital which are actually forced to hide under foreign 
flags. Is this justice? Is this freedom? Is this patriotism? 
Repeal our stupid navigation laws and the American flag 
would unquestionably be seen waving in every port of con- 
sequence in the world. 

What is the use of talking about the non-existence of a 
Merchant Marine when we have already one in existence that 
would do us credit did we not foolishly force it to hide and 
sail under false flags, and to depend upon the more hospitable 
protection of other countries, and other navies? Nobody is to 
blame for this loss of prestige and influence except ourselves. 
To me this situation seems inexplicable, and I can only ac- 
count for it through public ignorance. 

Were the facts thoroughly known, our navigation laws would 



2£2 OUR MERCANTILE MARINE 

be repealed at once; and our ship owners would be permitted 
to secure their ships and their labor under the same advantages 
as their rivals; these being the only conditions under which 
any business can succeed. 

We need more than anything else some sane recognition of 
changed conditions, and a sweeping away of the stupid ob- 
solete laws, which prevent many a fine American ship to-day 
from sailing under her real flag. Our present system is false 
and suicidal. Subsidies might of course make a few unprofit- 
able lines profitable at public expense; but that is not the true 
function of government and, at best, would be but a temporary 
support, liable to be withdrawn at any turn of the political 
wheel. 

This is the case where freedom and not protection is the 
cure, and where American ships should be permitted to come 
out from their present concealment. Protection has never yet 
succeeded on the high seas, and never will. This is not only 
history but sound and good economics. 

While I am not in favor of a general subsidy law, I would not 
object to a bounty being paid by the Government to both the 
owners of ships that fly the American flag, and the sailors who 
man the ships, in special cases, for a limited time only. 

In business life men pay large amounts annually for fire 
insurance which they hope, at the time of payment, may never 
come back to them as could only be in case of a fire, which 
they hope will not occur. Our city pays millions for a fire 
department as a protective service. 

Our Representatives in Congress, and the people who send 
them there should be more than willing to extend aid to an 
American Merchant Marine, and do all they can to further 
the means for offensive and defensive action in case of un- 
expected war. Ships might be useless without tenders to 
furnish coal, and transports to move troops to follow up a 
victory won in a naval engagement. 

We have lately become a great factor in the world at large, 
and must be prepared to sustain our position with dignity and 
credit. 



OUR MERCANTILE MARINE 223 

We all hope that during our lives war may not come, but 
the best way to insure peace is to be prepared for the unex- 
pected. 

They tell a story of an ungodly hunter who had leaned his 
gun against a tree and was surprised to see a big bear staring 
him in the face. 

He jumped for a branch of the tree and quickly pulled 
himself out of the way of temporary danger. The bear stood 
on guard for a long time and Mr. Hunter became tired. 

Finally he thought he would try the efficacy of prayer, and 
prayed in these words: "O Lord, I have lived nearly fifty 
years and have never asked a favor from you. Please give me 
a chance to get hold of my gun and I'll never ask another." 

I should be ashamed to have our country in such a predica- 
ment and hope the result of these meetings will be to incite 
action that will preclude such a contingency. Yankee in- 
genuity has met and conquered obstacles in all directions. 

Let us hope to arouse the people to the necessity of pro- 
tection to something besides American labor and American 
capital. 

We who have boasted for over a century that we .have held 
our own among the nations would hang our heads in shame 
if our country should be threatened with danger and we were 
found asleep and helpless because we had not been wise enough 
to put locks on our barns before our horses were stolen. 

Fellow citizens, this condition of things must not continue ! 
It should be stopped at once ! The necessity to change the 
order of things is clearly demonstrated, and being demon- 
strated, it now devolves upon us to decide what course must 
be adopted. 

There is a universal, urgent, crying need for immediate 
action of some kind that will start up our shipbuilding indus- 
tries, and exalt our flag over every mile of the waters of the 
ocean. 

From one end of our country to the other, from the rock- 
ribbed coast of Maine — famous once as the anchor of hope 
of the Merchant Marine and the great shipbuilding industries, 



224 OUR MERCANTILE MARINE 

to the deep-blue waters of the Gulf of Mexico — from the 
North Atlantic Coast to the Great Lakes, and thence on to 
the waters of the Pacific, dashing at the Golden Gate, rises 
up an earnest and emphatic demand that the distinction and 
glory of the American Merchant Marine be restored. Some- 
thing should be done at once and we and our friends should 
agitate this great subject in a manner that will compel im- 
mediate attention. Let every patriotic American agitate this 
burning question! Agitate! Agitate! Yes, my friends, agi- 
tate it constantly and vigorously until our glorious flag — the 
Stars and Stripes — will again proudly float over the supreme 
Merchant Marine of the world. 

In closing I again thank you for the privilege of addressing 
you and for the respectful attention you have given to my 



DEMOCRACY AND EVOLUTION 

Address delivered at the American Civic Alliance Banquet, in the 
Banquet Hall, Plaza Hotel, New York, April 15, 1909. 

THE American people have made giant strides, and 
achieved unparalleled success in their progress as a 
nation, but changing conditions among all the nations 
give rise to new problems which require thoughtful considera- 
tion and signal ability to provide for their proper solution. 

These United States already occupy a splendidly prominent 
place in the world's history. On the battlefields of the Revo- 
lution we proved our military efficiency, and the courage and 
sacrifices displayed by our people in the Civil War attested 
the perfection and permanence of our Government fabric. 

Dewey, Sampson, Schley and our brave sailors in 1898 as- 
serted and upheld our supremacy (next to that of England) upon 
the seas ; and, more than all, our steady commercial growth gives 
us a fixed and high rank among the nations. 

Our position as a great world-power is now undisputed, 
but we must not remain in any sense an incomplete and un- 
finished nation. In matters of art, for instance, we are woe- 
fully behind the other highly civilized countries, and the best 
we can say of ourselves is that we have made a good start in 
that direction. 

The great cosmopolitan city of New York should in time 
become the greatest art centre of the world, and I have no 
doubt that the fine abilities and unequalled resources of our 
people will eventually place us on a high level of artistic 
achievement, rivalling in that respect the older countries of 
Europe. 

In the struggle for commercial supremacy we have led the 
world. We have permanently established a democratic form 
225 



226 DEMOCRACY AND EVOLUTION 

of government which has not only completely answered the 
questions raised by De Tocqueville and Bryce, but has also 
proved an international moral uplifter. 

The impress of American democracy has long since placed 
its mark on the governmental policies of Great Britain and 
France, and more recently in Germany, and is being felt even 
in benighted Russia, where a disposition is shown to concede 
some sort of constitution to the people — an attitude hitherto 
unheard of in the history and policy of Czardom. American 
democracy will, ere long, influence the entire civilized world. 

Autocracy is slowly but surely yielding to popular govern- 
ment in many of its essential features the world over; and 
the result of the war with Spain and our acquisition of foreign 
territory have aided in the propagation of the faith in our 
grand democracy, and have encouraged the hope that Govern- 
ment of the people, by the people, and for the people can and 
will endure forever in all parts of the earth. 

In the conflict of nations the roar of the battlefield has 
reached its climax and happily spent its force. 

" Grim-visaged war has smoothed his wrinkled front, 
And now, instead of mounting barbed steeds 
To fright the souls of fearful adversaries, 
He capers nimbly in the halls — " 

of the Hague Conference to the pleasing music of the lute of 
Peace. 

In the near future, we hope great international questions 
will be decided upon the ground of justice, and the decisions 
of diplomacy and arbitration — not by bloodshed. Hence the 
urgent necessity for the schooling and training of diplomats 
who will always be able and ready to represent the interests 
of the United States. It is no longer warfare, but adjustment. 
The demand is, and will be, not for great soldiers and gen- 
erals, but for efficiency in matters diplomatic, which can only 
be acquired by training, experience and travel. These will 
produce our trained diplomats, and we should retain them 
permanently. 



DEMOCRACY AND EVOLUTION 227 

Lord Brougham, in his autobiography, tells us that he 
learned more in two years of travel and observation abroad 
than in his sixteen years' curriculum of study in Oxford and 
Cambridge ; while President William H. Taf t - - the travelled 
man, familiar with all the matters that come to his desk from 
experience and association, the first to attend a " School of 
Presidency " — typifies in a most forceful manner the value 
and importance of a School of Diplomacy. 

President Taft's long training qualified him most eminently 
for the high office of Chief Executive of the United States. 

A salient and necessary feature of the position of a trained 
diplomat should be the permanent tenure of office — he should 
not be subject to removal by every incoming Administration. 

Again, he should be adequately compensated for his valuable 
and, very often, difficult services in behalf of the nation. 

The destiny of this country is to be the leader in progress 
for all the nations of the globe. 

In looking through the history of the world we notice that in 
every age there was always one nation ahead of all other na- 
tions. The destiny of this country is to be such a leader, and 
not only a leader but a shelter and a protection to the un- 
fortunate and persecuted children of the old world; but, in 
order that she may be recognized as the undisputed leader 
in progress, she must have institutions based upon progressive 
principles and whose object is to discover ways and means 
whereby the evolution of the country may be assisted and prog- 
ress hastened. 

Nothing in this whole world is stationary, but everything 
is subject to change. The structures of government are sub- 
ject to this law. This is the law of evolution which applies 
to inanimate as well as animate structures. 

If Darwin's theory, that we have evolved from cruder or- 
ganisms, is true, it is also true as applied to governments, and 
if we search the history of the world, we find that govern- 
ments have passed through successive stages of evolution. 
Now, if evolution is the law by which the progress of govern- 
ments are regulated, then that evolution must go on, and it 



228 DEMOCRACY AND EVOLUTION 

would be absurd to assume that we have reached the stage 
when no further advancement will take place. Hence the 
doctrine of a certain class of political teachers — the so-called 
" standpat " policy is not only untrue, but is ridiculous on its 
face. It is the doctrine of the highwayman, who wants you 
to stand pat while he is picking your pocket. It is evident 
that if private undertakings make progress while the govern- 
ment stands pat, then the private undertakings can take ad- 
vantage of that government whenever it is conducive to their 
interests to do so. 

Thomas Jefferson says, " Some men look at constitutions with 
sanctimonious reverence and deem them the ark of the cove- 
nant too sacred to be touched. They ascribe to the men of 
the preceding age a wisdom more than human and suppose 
what they did to be beyond amendment. ... I know 
that laws and institutions must go hand in hand with progress 
of the human mind. As that becomes more developed, more 
enlightened . . . institutions must advance also and keep 
pace with the times." 

The cause of whatever evils we have in this country lies in 
the fact that the entire machinery of our government is not 
fully up to date. It does not keep pace with the times. An- 
other reason is that we have no definite standard upon which 
our relations, both public and private, could be adjusted. This 
is a serious drawback to the government of the people by the 
people. In the governments of the old world there is a king or 
a class of men who set up standards for the people. We have 
nothing of that kind here. Our standards, therefore, are 
varied and conflicting, they bring discord and cause strife, for 
men are unable to understand each other. This diversity of 
opinion is an evil in itself, and it is a great evil when there is 
no standard of arbitration which can be accepted by everyone 
as being just. 

We are approaching a period when the government must 
keep pace with the times. We see specialization existing in 
various branches of industries. We have not only specialists 
— men who specialize a certain branch of learning — but also 



DEMOCRACY AND EVOLUTION 229 

men who divide that branch and make a specialty of a part of 
it. Thus we have doctors and lawyers; doctors divide them- 
selves into osteopath homoeopaths, allopaths, eye specialists and 
lung specialists; and there are mining lawyers, corporation and 
criminal lawyers, etc. 

The same thing is true in regard to bankers and every branch 
of commerce and industry. Politics is the only exception to 
this rule. We have men, indeed, who come into politics as 
specialists of various vocations and avocations, pre-eminently 
those who practice behind the bar as well as those who prac- 
tice before it, but many of them, unfortunately, lack the nec- 
essary qualifications whereby they can serve the people honestly 
and efficiently. Such a state of affairs might be suitable for a 
primitive people, composed entirely of agriculturists and other 
simple vocations, but it will never do for a highly progressive 
state; in fact, the most progressive country on the face of the 
earth. This is a serious drawback in our democratic arrange- 
ment, and Mr. Carlyle is not altogether wrong when he re- 
marks that, "If nine men out of ten are blockheads, as is 
common calculation, how in the name of heaven can we make 
a ballot box grind you wisdom out of those ten men ? " 

This is a serious drawback in democracy, I repeat, and we 
must find some means whereby we can have trained statesmen 
and diplomats, who make as much a profession of their par- 
ticular field of work as is done in the other professions. 

Our diplomatic service is not altogether a credit to our 
country. Influence and manipulation too often result in the 
appointment of men as consuls and vice-consuls who are unfit 
for the duties of their positions either by training or education. 

Like every civilized nation, we must have a training school 
for statesmen and diplomats; and it were well, too, that 
we founded schools for those citizens who need to be taught 
how to exercise the functions of a citizen intelligently. 

I leave it to Mr. Lafayette-Savay to tell us how we expect to 
accomplish this through the American Civic Alliance. 

The time has come — in fact has long been overdue — 
when we should enact more stringent laws regarding immi- 



230 DEMOCRACY AND EVOLUTION 

grants to this country. When we formerly sang the old song* 

" Come from every nation, 

Come from every way; 
Our lands they are broad enough, 

Don't be alarmed, 
For Uncle Sam is rich enough 

To give you all a farm," 

we needed foreigners to help us, and the grade of those who 
came was high; that is, they were industrious workers, and did 
not in any way represent the criminal class or the anarchistic 
idea. Foreign countries at that time did not use the United 
States as a dumping ground for their undesirable citizens. 

We welcome immigrants who will be willing to respect the 
law and who are willing and able to earn a living. 

But the bars should be put up to exclude all who leave their 
own country for that country's good. We should also hear 
less about " Irish-Americans/' " German-Americans," " Rus- 
sian-Americans," or any other hyphenated Americans. When 
they come here to make a home and earn a living they should 
be simply American citizens prepared to obey the laws as they 
find them, and not to demand that the laws should be framed to 
bear a likeness to any laws of their native land. The " Black 
Hand " outrages are shocking to our every sense, but out 
of evil cometh good, and the blood of the martyrs who have 
lost their lives, or the lives of some of their friends, will be- 
come seed that will produce a public sentiment so strong that 
more care will be taken to prevent the landing of the criminals 
who are responsible for such outrages. 

Poverty is no crime, yet we prevent the landing of one who 
might become a charge upon the public, while " blackhand- 
ers " and anarchists have little trouble in getting in provided 
they have funds for their immediate wants. 

This question strikes me as even greater than tariff reform, 
and must be met, and at once is none too soon for action. 

In the further evolution of our democracy, many matters 
present themselves for consideration and adjustment. 



DEMOCRACY AND EVOLUTION 231 

Others will arise from time to time as we grow and develop 
our resources, but upon these I have not time to dwell at 
length. 

Chief in importance, however, is the matter of governmental 
regulation of corporations. Repugnant as the doctrine of 
socialism may seem to many, and so utterly foreign to the 
very spirit of our Constitution, I believe that the machinery 
of our Government — without restricting growth — should be 
so adjusted as to regulate the great and powerful establish- 
ments of the country — agricultural, railroad and industrial — 
and to punish and prevent all corporate abuses. 

In my opinion these abuses can be prevented; and their 
existence or persistence is the fault alone of the Government 
in not suppressing them in the incipient stage. 

Another momentous question that faces us to-day, and, as we 
evolve, will be more marked and important, is that of the 
congestion of population in the great metropolis and other 
large cities. 

While I am an ardent individualist — with all that the term 
implies — I firmly believe that some provision should be made 
by this Government to prevent the growing evil of this con- 
gestion, so that immigrants to our shores, instead of being 
crowded and cramped in cities where they can hardly turn 
around, could be afforded a better chance to distribute them- 
selves to localities where a fair opportunity is given to every 
man to compete for his individual improvement and success. 

Another word, my friends, in behalf of the revival of our 
Merchant Marine, and I close. You all know somewhat of 
this great question, and should help to solve it. 

Let ways and means be devised to restore our old proud 
place of mastery on the seas, and let the flag of our beloved 
country be seen again, floating in every port of the world. 



THEODORE ROOSEVELT: A GREAT AMERICAN 

Address delivered in the Metropolitan Temple, New York City, 
May -?7, 1909, at the Dedication of the Roosevelt Administration Me- 
morial Window. 

IT is a happy idea to commemorate the services and career 
of Theodore Roosevelt, as President of the United States, 
by a Memorial Window in this sacred Metropolitan Tem- 
ple, for Theodore Roosevelt is destined to rank in history as 
one of the greatest, if not the greatest, of our Presidents after 
Washington, Lincoln and Grant, who are already enshrined 
in Memorial Windows here. Theodore Roosevelt's fame, I 
venture to say, will grow brighter with advancing years, 
whether, at some future time, he is re-elected President of the 
United States or not. So, though he still lives, he is fittingly 
glorified by being placed side by side with his great presidential 
predecessors in this edifice, for his term having ended, we can 
safely judge him by his past. 

The work of reform that he began, and carried on with 
so much vigor and success was, I need hardly say, greatly 
needed in this country to correct corporate and other abuses 
that were shedding their blight, like the deadly upas tree. 
These had grown up with our growth, and become oppressively 
unjust to the people, and were beneficial only to violators of 
the law, to the men who abused their powers and opportunities 
to secure wealth and power by questionable or dishonest 
methods, to men who schemed for monopoly in trade, or unjust 
advantage over their competitors, and to men who had a weak- 
ness for law breaking practices in corporation management, 
or for wholesale graft. 

One of these wrongs was particularly glaring and it had 
endless ramifications, namely, railway rebating, a great evil, 

232 



THEODORE ROOSEVELT 233 

for extirpating which Theodore Roosevelt deserves infinite 
credit, far more than has yet been given him. 

He undertook an herculean task when he sallied out, with 
his " Big Stick," and made war on the abuses of his time. 
But the " Big Stick " was only for those among the big men 
who were wrong-doers. He boldly fought, for the benefit and 
protection of the people and the country's trade and commerce, 
a strenuous battle against fraud, the misuse of power, illegal 
methods and corruption of every kind in the management of 
corporations, and, in conjunction with the law officers of the 
Government and the legislation he inspired, he swept them very 
largely away. At the same time he aided and encouraged all 
that was legitimate and honest in American enterprise and in- 
dustry. 

Above all he caused the Interstate Commerce law to be 
so amended and enforced that it put a stop not only to the 
rebating iniquity but to other abuses, and unlawful prac- 
tices, that had been in vogue among corporate officials, through 
the penalties and supervision that the new legislation of Con- 
gress imposed. 

By so doing he secured, among other things, equal justice 
to all railway shippers, meaning particularly, justice to small 
shippers. Very many of these had previously suffered habit- 
ually from specific acts of injustice by railway and other com- 
panies, whose officers had been accustomed, for sinister pur- 
poses, to oppress and defraud the many for the benefit of the 
few large shippers. At the same time exposure overtook some 
of those in control of large corporations who had so abused 
their trust, and so used their corporate funds, as to have prac- 
tically looted them. Happily these were exceptional cases, 
for honesty was still the rule. 

President Roosevelt was also the means, direct and indirect, 
of instituting legal proceedings which exposed much of other 
grave evils in our business life and was effective in raising 
the standard of our business morality as a nation. He stood 
on the solid and just platform of a square deal for all. As 
a practical patriot he had no rival. 



234 THEODORE ROOSEVELT 

Of course in this aggressive campaign against law breakers 
and corporate dishonesty in which he singled out, to use his 
own words, " malefactors of great wealth," for his severest 
condemnation, he made bitter foes of these, and all in authority 
who had abused their trust and enriched themselves at the 
expense of others who were at their mercy. But it was to be 
expected that these would wince under the lash of exposure 
and denunciation, and retaliate in their own way. But they 
were, after all, few, in comparison with the multitude of men 
of honor and rectitude in high places. 

The great mass of the American people, rich as well as poor, 
were always with President Roosevelt in his crusade against 
illegal and fraudulent acts, and felt nothing but admiration 
and gratitude for the good work he was doing, despite the 
aggressiveness of the manner in which it was sometimes done. 
This good work having been done cannot be undone, for it was 
vastly beneficial to the nation through its practical utility. 

Such reforms in good government are peaceful revolutions 
that never go backward ; and for all time to come Theodore 
Roosevelt's work of reform, and purification, while he was 
President of the United States, will continue to bear good fruit. 
He became the National mouthpiece of Law and Justice, and 
spoke for the people, with all the force and authority of one 
who knew that the people were with him. 

We alreadv r see how resolutel}' and devotedly his successor 
is bent on studying and .carrying out the Roosevelt policies with 
respect to Interstate Commerce and all business colorations, 
and the punishment of law breakers. This is because he fully 
appreciates his great responsibility, well knowing that these 
policies are sound in principle, and deal justly between mau 
and man. Hence they represent a popular cause, the people's 
cause, and will endure, and be a lasting monument to Theodore 
Roosevelt, none the less because he was at times too heated and 
impulsive in the expression of his indignation against corporate 
wrong-doers, and his attacks upon predatory wealth. So when 
he erred it was only through an excess of zeal. 

The American people supported him in his fight against 



THEODORE ROOSEVELT 235 

fraud and abuses of power because they knew him to be honest 
and conscientious as well as courageous and that he was doing 
good work for them — work that needed to be done in their 
behalf and for the country's moral salvation in business mat- 
ters. 

No one could ever impugn the honesty of Theodore Roose- 
velt. He was above suspicion, and that distinction will cling 
to him through ages. President Taft will never allow the loop- 
holes of the law to be turned into channels for the escape 
of those Mr. Roosevelt described as " malefactors of great 
wealth " if he can prevent it. 

While this commemorative window in the house of God, in 
his native city, which we now dedicate, is a singularly felicitous 
recognition of Theodore Roosevelt's great and noble work and 
splendid record as President of the United States, it marks 
a new era in the history of our Government administration at 
Washington. It also emblazons and typifies his career in glow- 
ing colors, and, as a work of art, is in itself beautiful and, as 
we all know, " A thing of beauty is a joy forever." 

Theodore Roosevelt seemed, like Washington and Lincoln 
and Grant to have been specially called for the occasion from 
the ranks of his fellow men, to correct the abuses of the money 
power that had grown up, as tares, in the midst of our great 
field of national prosperity, and to keep the Ship of State, that 
Washington had launched and Lincoln saved from wreckage 
on the rocks and shoals of 'Secession, on an even keel, and free 
it from its barnacles and the new dangers that beset it. He 
was gifted in a remarkable degree with a quick perception of 
what the country needed, and a philosophical insight into the 
good and evil tendencies of our times. 

He did his work so well, and left the Presidential chair with 
so bright and clear a record, that he well deserves to be com- 
memorated in many ways, to show our national appreciation 
of him, and this memorial is one of these that reflects our 
appreciation of his courageous course in pursuit and defense 
of right and in punishment of wrong, and his high purposes 
in guiding and bettering our national forces. Moreover he 



236 THEODORE ROOSEVELT 

labored earnestly to promote harmony between Labor and Cap- 
ital and lessen the gulf between them. He was not a breaker- 
down. He was a builder-up. He sought to destroy nothing 
but evil. He was aggressively opposed to the Devil and all 
his works in our business life. He was always advocating 
" A Square Deal." 

Just as the St. George of romance set out, mounted, with 
his spear in hand, to kill the destroying Dragon of Evil, so 
the modern St. George — Theodore Roosevelt — armed with 
his " Big Stick," the Gospel of Truth, and abundant evidence 
of fraud and unlawful corporate acts, set out to destroy the 
hydra-headed monster of Corporate Wrong; and both crusaders 
were triumphant! 

What he earnestly desired and preached was honest dealing 
and full publicity in corporate affairs, fairness in both letter 
and spirit towards competitors, so as to make monopoly im- 
possible, and absolute freedom from misrepresentation both in 
statements for the public and in selling stock or commodities, 
as well as in everything else. He sought to promote equity in 
economics — that is, common honesty — not only in our carry- 
ing trade but in all our financial and industrial affairs, and 
restore our business methods to a high standard wherever they 
had fallen into the mire, or become warped by special interests 
for their own special benefit. This is what the beneficiaries 
disliked so much. 

President Taft's object will be to secure these desirable ends 
by enforcing existing laws and recommending such changes 
in legislation as may be necessary to meet any deficiency 
therein, or prevent any relapses to former abuses of power- 
He will voice into our laws what Roosevelt voiced into the 
Nation's heart. Those therefore, who are so mistaken as to 
suppose that President Roosevelt's policies and moral princi- 
ples may become a dead letter in this administration will be un- 
deceived. They will discover that President Taft is not a re- 
actionary, but progressive. 

Thus for instance, if the recent resale of the control of the 
Norfolk and Western Railway to the Pennsylvania R. R. Co. 



THEODORE ROOSEVELT 237 

is found to be illegal, because of its being against public policy, 
it will have to relinquish its control. In this event we shall be 
reminded of that old couplet: 

"The King of France went up the hill, 
With twenty thousand men; 
The King of France came down the hill, 
And ne'er went up again." 

"We can see the results of Theodore Roosevelt's policies crop- 
ping out on the surface of our National affairs from time to 
time, and even from day to day. We saw one of them very 
recently in the payment by the American Sugar Refining Com- 
pany to the United States Government, of an aggregate penalty 
of two million one hundred and thirty-four thousand dollars, 
as a compromise settlement for claims and penalties amounting 
to nine millions growing out of the sugar weighing frauds of 
the Company, on its Brooklyn docks, by the use of false scales 
and bribing Custom House weighers. 

This recovery was due to suits instituted by Theodore Roose- 
velt, during his administration, and is the largest yet recorded 
from any one corporation. 

The restitution shows how just those suits were, for the 
Trust admitted the frauds and the justice of the Government's 
claims by making this payment without appealing from the 
judgments already obtained, or awaiting the issue of similar 
suits against it, still pending. 

These claims and penalties covered only the discoveries made 
in the years since 1904, but the Government alleged that the 
" doctored " scales were used by the Trust long before that 
time. 

The Attorney-General of the United States in accepting this 
money compromise, in his civil suits against the Trust, clearly 
stipulated that it would in no way exempt its officers or em- 
ployees, who practiced or connived at these frauds, from crim- 
inal prosecution. 

In this conspicuous case we have a practical refutation of 
the charge made by Trust magnates, and others who felt the 



238 THEODORE ROOSEVELT 

shoe pinch, that President Roosevelt was crying fraud when 
there was no fraud, and so striking at our industrial prosperity. 

But his sledge hammer blows were not dealt at honest and 
lawful trade and enterprise. He struck only at fraud — at the 
dishonest and unlawful practices that had become rife among 
carrying and other corporations, and were forming ulcers on 
the body politic, and exerting a demoralizing influence upon 
our whole business life, and lowering the tone of our com- 
mercial morality. 

The Sugar Trust had previously paid heavy penalties, after 
conviction for accepting railway rebates, notably from the New 
York Central Railway Co., which also paid similarly heavy 
penalties in the same cases. 

Many other suits instituted by President Roosevelt against 
railway companies for rebating, and against large shippers for 
accepting rebates were equally productive of convictions and 
penalties, although in others, while guilt was proved, legal 
technicalities prevented conviction, as in the famous twenty- 
nine million dollar penalty case. 

This amount was so excessive that it practically defeated its 
own obj ect, but subsequent litigation sustained the Govern- 
ment's claims except as to the amount of the penalties. 

The exposure and conviction of the Sugar Trust furnished 
the public with a practical commentary upon the illegal and 
fraudulent practices of other large corporations whose officers 
were guilty of committing, or sanctioning, unlawful and dis- 
honest acts in their corporate capacity that they would have 
shrunk from as private individuals. 

This, of course, shows that they had a false standard of 
business morality, and President Roosevelt did more to expose 
and correct this, and introduce a higher standard than any one 
man or any Administration, had ever done before. He raised 
the strong arm of the law against corporate thievery and law- 
breaking, and made them both unprofitable and disgraceful 
where they had before been tolerated. 

Even now this great fact is not fully appreciated by the 
people, but its effect is becoming more and more evident in our 



THEODORE ROOSEVELT 2P.9 

business life, the atmosphere of which has been purified by his 
attacks on what he called " predatory wealth." He opened 
the country's eyes to much that it had been blind or indifferent 
to. He did not err in his convictions, and he had the courage 
of his convictions. He was not afraid to denounce the " male- 
factors of great wealth and high social position " who were 
guilty of violating law and misappropriating other people's 
money to increase their own riches and power, but he re- 
spected men whose great wealth had been properly acquired. 

By so doing he performed a duty to the people and they 
recognized him as a public benefactor, and this righteous and 
patriotic work of his will continue to bear good fruit through 
all time to come, for it has laid the foundation of a better 
state of things in this great country of ours than we ever had 
before. 

While revolutions of this kind never go backward, but are 
always progressive from age to age, just as civilization itself 
is, the changes now being wrought are so gradual and undis- 
turbing as to be almost imperceptible. 

President Roosevelt led the way to a clearer popular percep- 
tion of the moral as well as the legal responsibility of corpora- 
tions than had been ever before recognized. It had always 
been supposed by the people, and the supposition had passed 
into a by-word, that a corporation had neither a soul to be 
damned nor a body to be kicked. 

But he advanced the idea, and practically showed, that cor- 
porations have an individual entity for both punishment and 
reward, and this idea has been since spreading, and taking root 
in the courts of law. He thus directed the public's attention 
to a new phase of corporate life and responsibility. 

At its present term, the New York Court of Appeals held, 
in the case of the Rochester Railway and Light Company, that 
a corporation could be guilty of, and punished for, homicide. 
This is a new legal development in line with the punishment 
of corporations for criminal acts by fines, and the prosecution 
of their officers and agents, as such, for their criminal acts, 
individually, Therefore corporations have a moral as well as a 



240 THEODORE ROOSEVELT 

legal and financial character, and they should be held account- 
able for moral as for legal delinquencies at the bar of public 
opinion, as well as in the courts. 

Honest, law-abiding corporations have nothing to fear from 
this greater recognition and enforcement of responsibility for 
their own acts, nor from the strict supervision of the Inter- 
state Commerce Commission that railway companies are now 
working under, which covers both the form and every detail of 
their bookkeeping, a reform initiated by President Roosevelt. 

This checking of railway accounts, when properly done, ef- 
fectually prevents all illegalities, including rebating. It was 
through this great railway iniquity that large shippers, in the 
past, killed off competitors and created huge monopolies, with 
resulting pyramids of wealth, for their beneficiaries, ill-gotten 
gains, so vast that they surpassed the dreams of avarice. 

Hence President Roosevelt's denunciation of the means by 
which such overgrown fortunes were accumulated was perfectly 
just. 

They were clearly inimical to the greatest good of the great- 
est number, as well as immoral and in violation of law, and 
consequently of the rights of the people. 

In his crusade against evil, it is true that in many cases the 
innocent suffered with the guilty for the time being. 

In a street riot a crowd of onlookers sometimes exceeds 
in number that of the actual rioters. When the police 
charge to disperse the crowd and quell the riot, those most 
likely to be hurt are they who are entirely innocent of wrong. 
This is always unfortunate, but unavoidable, as the street must 
be cleared and the rioters must be subdued in the interests of 
public good. 

So great and powerful became the personality of President 
Roosevelt that wherever he spoke in public the world listened. 
He had not only Americans but the people of all nations for 
his audience. He was the observed of all observers, the centre 
of attraction among the world's potentates, and in popular in- 
terest he eclipsed all the crowned heads of Europe. 

He was probably the most talked of and most generally dis- 



THEODORE ROOSEVELT 241 

cussed man in the world, and the world's most commanding per- 
sonality; and so, as the head of the Government of the United 
States, he enhanced its power and prestige abroad. 

It was a brilliant idea of his to send our fleet of battleships 
round the world. It was a bold and magnificent act of prac- 
tical statesmanship, for it raised the world's estimate of our 
naval strength and efficiency immensely, by furnishing ocular 
proof of it; and it correspondingly raised the officers and men 
of our navy in the world's estimation, while increasing pride 
in the service among both officers and men. Moreover, the evo- 
lutions and target practice of the fleet on the voyage increased 
their proficiency in gunnery to a higher degree than had ever 
before been known in our navy, or probably in any other. 
While an advocate of peace, President Roosevelt was also an 
advocate of more battleships to preserve the peace. He be- 
lieved that the best way to avoid war was to be always well 
prepared for it. How strenuously he worked for peace in the 
war between Russia and Japan we can all remember; and it 
was at his personal suggestion and invitation that the repre- 
sentatives of the two countries came to the United States and 
negotiated their treaty of peace in New Hampshire. History 
will probably write the conference which resulted in peace be- 
tween Russia and Japan as his greatest achievement, as it had 
such a world-wide effect. As Washington's name is linked with 
Valley Forge, Grant's with Appomattox, so Roosevelt's will be 
linked with Portsmouth by the generations who live after us. 

But power that he was, no President could have stood nearer 
to the people, or been more approachable, and this was shown 
by the frequency with which he was called " Teddy," not at 
all in disrespect, or undue familiarity, but in an admiring and 
brotherly spirit of comradeship, and he appreciated and liked 
the use of this pet name of his boyhood. 

He, too, always welcomed heartily, at the White House, any 
of his old hunting friends, of the Western plains, and ranch- 
men of Dakota, or any of the Rough Riders of his old regi- 
ment, when they came to Washington, and was equally courte- 
ous and affable to the rough and smooth, rich and poor. He 



242 THEODORE ROOSEVELT 

was in active sympathy and unison with the masses, and his 
good spirits and his public spirit were equally inexhaustible. 

His enthusiasm for the people's welfare was conspicuously 
shown by the work he did in bringing about the passage of 
the Pure Food Law, and in abolishing the scandalously bad 
features of the cattle-yards and slaughter-houses in Chicago 
and elsewhere, and making sanitary reforms in them compul- 
sory and permanent. He aimed at practical utility in every- 
thing he did. 

Here indeed the country felt with him that cleanliness is 
next to Godliness. It was only one of the many Augean 
stables that he cleaned out during his Presidency. He believed 
in moral and physical purification, and a clean sweep for all 
abuses. 

The wonderful career of Theodore Roosevelt will be a fertile 
theme for future historians both at home and abroad. He 
will be a colossal figure that will gain rather than lose in size, 
interest and importance by the flight of time. 

Xo other country than this could have made his career possi- 
ble. It reads like a romance. The son of Theodore Roosevelt, 
he was born here, at his father's house in Twentieth street, 
a few doors east of Broadway, on October 27, 1858; and he 
was favored by Fortune from his first start in life. 

I have seen him scampering, as a boy, about Union Square, 
where at the corner of Broadway and Fourteenth street, his 
grandfather lived. 

He was as full of restless energy then as he is now. From 
school he went straight to Harvard University and graduated 
there in 1880. From Harvard he came back to New York, 
and immediately went into politics, in which he was so success- 
ful, that he was in 1882, elected to the Assembly at Albany. 

In 1883 he married; and after leaving the Legislature, in 
1884, and acting as a delegate to the National Republican Con- 
vention in that year, he went to live on a ranch in North Dakota, 
his wife having meanwhile died, leaving a daughter, Alice, who 
is now Mrs. Nicholas Longworth. There, in Dakota, he re- 
mained two years, and of his life, and hunting exploits on the 



THEODORE ROOSEVELT 243 

ranch, he has written several books of acknowledged literary 
merit. His rugged life on the western plains served him well. 
Other books on other subjects have followed, twelve in all. 

Returning to New York in 1886, he married Miss Edith Ker- 
mit Carow, his present wife, who lived with her father, Chas. 
Carow, and her grandmother, Mrs. Robert Kermit, next door to 
his grandfather's house on Fourteenth street, and whom he 
had known from childhood, showing that propinquity is dan- 
gerous. 

In that year, having re-entered politics, he was nominated 
the Republican candidate for Mayor of New York, but defeated 
— of course, because he was a Republican, New York being- 
Democratic. Then, for two or three years he busied himself 
more with writing books and magazine articles than with poli- 
tics, but in 1889 he was appointed National Civil Service Com- 
missioner, and became an enthusiastic advocate of Civil Service 
reform. 

He held that position till, in 1895, he was appointed Presi- 
dent of the New York Police Board, in which capacity he was 
very energetic, and introduced many reforms that added to 
the efficiency of the police force. He became the terror of 
police delinquents, but resigned the office in 1897 to become 
Assistant Secretary of the Navy. 

Yet when the Spanish War broke out, in the nest year, he 
resigned the office to organize a regiment of Rough Riders of 
which he became Lieutenant Colonel. With this — officially 
the First Regiment of United States Cavalry Volunteers - — he 
went, as we know, to Cuba and for distinguished service at San 
Juan Hill, and elsewhere, he was promoted to the rank of 
Colonel. The war being over he returned and was mustered 
out of the service in September, 1898. 

His war reputation added immensely to his fame and popu- 
larity, and he came back as one of the heroes of the Spanish 
War in Cuba, just in time to receive the Republican nomina- 
tion for Governor of New York. He was elected by a tidal 
wave vote and on the first of January, 1898, became Governor 
of the Empire State, and so remained till the end of 1900. 



244 THEODORE ROOSEVELT 

On the 4th of November in that year he was elected Vice- 
President of the United States; and he was installed into that 
high office, with the lamented McKinley as President, on the 
4th of March, 1901. 

Then, seven months later, that terrible deed, the assassination 
of McKinley, convulsed the country with horror, grief and in- 
dignation, and on the 14th of September, 1901, Theodore 
Roosevelt became President of the United States. Thus 
swiftly, through this great tragedy, he passed from high to 
higher. 

On the 8th of November, 1904, he reached the crowning 
point of his ambition by being elected his own successor as 
President of the United States ; and when he retired at the end 
of his term, on the 4th of March last, it was of his own choice. 
He could, beyond question, have been re-nominated and re- 
elected for another term. But having served in the White 
House for seven and a half years he preferred to hand over 
the Presidency to a successor of his own selection, whom he 
felt sure would also be the choice of the people, and on whom 
he could rely to carry out his own policies that had received 
popular endorsement. 

President Roosevelt over and over again positively refused 
to accept a re-nomination, in reply to urgent entreaties that he 
should do so from leaders of his party in the National Conven- 
tion. Had he consented, they knew, just as he knew, that he 
would have been nominated by acclamation, without opposition, 
on the first ballot. But having served practically two terms 
he declined a third term on general principles. Here he showed 
his self-sacrificing and patriotic devotion to a principle, his 
time-honored argument being that no man should hold the 
Presidency for three consecutive terms. 

His choice of his successor by President Roosevelt was em- 
inently good. No more able and eminent citizen could have 
been named — a man learned in the law, and of vast experience 
in statesmanship and public affairs, and who had held, with 
great distinction, high office on the Bench, and in the Cabinet 



THEODORE ROOSEVELT 245 

as Secretary of War, after having been Solicitor General, and 
in the Philippines as Governor. 

So William Howard Taft was elected President of the United 
States by a sweeping majority, and the country was safe. The 
people elected him to carry out President Roosevelt's policies; 
because they believed in Roosevelt and his principles. 

Here indeed Theodore Roosevelt was again crowned with 
success — the greatest success of his life — in this election 
of his chosen successor. The people not only showed no re- 
sentment, in the matter of his choosing his own successor, but 
gave his choice their enthusiastic approval at the polls. It was 
as much a victory for President Roosevelt as for his good and 
loyal friend, Judge Taft, and a great triumph for both. No 
previous President had, or probably could have publicly chosen 
and practically elected his own successor. Two retiring Pres- 
idents had aroused popular resentment by merely suggesting 
their successors. 

Thus the career of Theodore Roosevelt has been one of al- 
most unbroken success and it continues with him now that, as a 
thorough going sportsman, he is shooting lions right and left 
in Africa. Let us hope that his good fortune and courageous 
spirit will never desert him. 

The American people justly admire his prowess, his physical, 
mental and moral strength and courage, his boldness in de- 
fense of his own convictions of right and wrong — of what 
he knows, or believes, to be right, and in censure and condemna- 
tion of what he knows, or believes, to be wrong. He may in- 
deed well be regarded as America's greatest apostle of Justice 
in public life. The people admire him, too, for his versatility 
and remarkable capacity for business or pleasure, political work 
or play, sports or literature, oratory or statesmanship, and 
above all they trust him, having absolute confidence in the in- 
tegrity of his motives. 

His overshadowing political position and fame have of course 
eclipsed Theodore Roosevelt's literary reputation, but his con- 
tributions to American periodical literature, and his ability as 



216 THEODORE ROOSEVELT 

an author of graphic and forceful books, that have achieved a 
wide popularity, should not be overlooked in reviewing his phe- 
nomenal career. He was as vigorously industrious and ener- 
getic with his pen as he was talented as an author. His his- 
tory of the naval war of 1812, written when he was but 24 
years of age, is looked upon as one of the best ever published 
bearing upon that subject, and is accepted as a text book with 
the endorsement of the highest authorities. 

He always worked hard and played hard, and seemed never 
to tire. Work to him was play, because he took pleasure and 
found happiness in it. He is now displaying the same traits 
in African hunting grounds that he showed at home. 

His wide range in literature is suggested by the subjects 
of his books. His " Winning of the West " was published in 
1880; his " History of the Naval War of 1812," in 1882; his 
"Hunting Trips of a Ranchman," in 1885; his "Life of 
Thomas Hart Benton," in 1886; his "Life of Gouveneur Mor- 
ris," in 1887; his " Ranch Life and Hunting Trail," in 1888; 
his "History of New York," in 1890; " The Wilderness 
Hunter," in 1893; his "American Ideals and Other Essays," 
in 1897; "The Rough Riders," in 1899; his "Life of Oliver 
Cromwell," in 1900, and " The Strenuous Life," in the same 
year. Most of these were written while he was more or less 
busy with other occupations. Yet, with all his activities and all 
his unexampled and amazing achievements and success, he has 
•only just passed his fiftieth year. Even since he retired from 
the Presidency he has published several magazine articles on 
public questions in The Outlook, of which he has become con- 
tributing editor; and he is under contract to write his African 
hunting experiences for a magazine at a dollar a word. So, 
while his killing of animals is a knockout to them, it is money- 
making sport to him. 

No other American citizen ever had such a marvellous history, 
such a brilliant career, and, take him all in all, the American 
people may well be proud of Theodore Roosevelt, and delighted 
to do him honor, for it may be truly said of him that he always 
labored for his country's good, and labored hard and well. 



THEODORE ROOSEVELT 217 

Though an aristocrat by birth he is a man of the people, with 
a keen warm-hearted sympathy for his fellow man of all con- 
ditions, and with a handshake for all. 

Among his other merits, it is greatly to the credit of Theo- 
dore Roosevelt that he has always been a religious man, a 
member of his Church, and a regular attendant at its services, 
with his family, as well as a pew holder. 

Yet the only unpopular act of his administration was in or- 
dering the old inscription " In God we trust " removed from our 
coins. This act, which Congress promptly reversed, by or- 
dering its restoration, was actually due to his being strictly a 
religious man. He said he considered it impious, and like tak- 
ing the name of God in vain, to put it on " filthy lucre " — on 
money, the abuse of which — or rather of the money power — 
he had so earnestly decried. 

The work of Theodore Roosevelt as President, must not, 
however, be judged merely by the laws that he caused to be 
enacted, and the other tangible evidences of what he accom- 
plished, for these represent little of his achievements, but by 
the intangible moral forces that he set in motion to broaden 
and better the condition of American life by removing obstruc- 
tions to the welfare of the people as a whole, and by the de- 
velopment of good government. He awoke the public con- 
science where it had been dormant or sleeping, and arrested, 
or at least curbed, the evil tendencies of the age, and so pre- 
vented the wrong-doers in power, and those they controlled, 
from continuing to abuse that power, and going from bad to 
worse, in their lawless disregard of the rights of others. 

Consequently what he averted is as much to be considered 
as what he cured. He inaugurated, in the administration of 
the Federal Government, an era of moral reform and recon- 
struction, a silent revolution. He was as much opposed to the 
misuse of power by organized Labor, as by Capital, and studied 
only the greatest good of the greatest number, with equal 
justice to all. 

In recognition of his merits and achievements he has de- 
servedly been the recipient of honors, as a Doctor of Laws, 



248 THEODORE ROOSEVELT 

from various universities, Columbia having conferred the degree 
of LL.D., upon him in 1899; Yale and also Hope College in 
1901 ; Harvard in 1902; Northwestern in 1903, and Pennsyl- 
vania and also Clark University in 1905. But these are mere 
incidentals in a national career so unexampled. His greatest 
testimonial has come from the people. 

Therefore, the Memorial Window that we here enshrine, and 
consecrate under the same roof with these other Memorials of 
illustrious Presidents of the memorable past — Washington, 
Lincoln and Grant — is another appropriate honor — a well- 
deserved recognition of the great practical and patriotic work 
and sterling manhood of Theodore Roosevelt as President of 
the United States of America, and his exceptional career jus- 
tifies this exceptional recognition during his lifetime. 

If I could suggest a line that would fitly describe in a few 
words the leading characteristic of Roosevelt, it would be this: 
" He made the American people think," and will keep them 
thinking for some time to come with good results to the Na- 
tion. 



AMERICA GREETS JAPAN 

Address delivered at the farewell dinner given by Baron Shibusawa, 
Chairman, Honorary Commercial Commission of Japan to the United 
States under the auspices of the Associated Chambers of Commerce 
of the Pacific Coast, at the Hotel Astor, New York, Oct. 20, 1909. 

DURING the past month we have been celebrating great 
events, — the discovery of America by Columbus, the 
first voyage up the Hudson River by the great explorer 
after whom the river is named, and the centennial anniversary 
of the successful building and navigation of the first steamboat 
by Fulton — the famous Clermont. 

It seems a fitting time just now for us to do honor to the 
delegation of Wise Men from the East, who come here to study 
trade and financial and educational conditions, with the view 
of benefiting in various ways their great and progressive nation 
— the Land of the Rising Sun — and extending its industries, 
commerce and education. 

We welcome them as students, but still more as a friendly 
delegation from one of the nations that we are proud to call 
our friends. We do not look upon them as strangers, for 
some of them at least have been here before, and some have 
won honor in our American colleges. 

We sincerely hope that they may have added to their store 
of useful knowledge; and I know that they have done much to 
cement the strong friendship which exists between our people 
and theirs. 

The four leading statesmen in the world, in my opinion are: 
First, Prince Ito; second, ex-President Roosevelt; and third and 
fourth, respectively, King Edward of England and the Emperor 
William of Germany. 

I first met Prince Ito over forty years ago when he was sent 
by his Government on a mission to the leading countries of the 
219 



250 AMERICA GREETS JAPAN 

world, as a member of a commission to study the financial sys- 
tems of the various nations. He had a letter of introduction 
to General Grant, the then President of the United States. The 
Secretary of the Treasury was a very busy man, in those days 
and had little time to attend to matters outside of his immedi- 
ate department; so General Grant sent Mr. Ito with a letter 
of introduction to me, as one who would be able and willing to 
assist the members of the visiting commission in their work. 

Mr. Ito, in particular, proved an apt scholar, and soon mas- 
tered the details under my suggestion, or, I may say, my tui- 
tion. The commission afterwards went to London, Paris and 
Berlin, and made themselves conversant with the English and 
French monetary systems, as well as the German. 

On their return to Japan, via the Suez Canal, they evolved a 
new system for their country, based on American ideas, for 
Mr. Ito made an elaborate report strongly urging the American 
system in its entirety as the simplest and best. 

This was the first link in the chain of sympathy and friend- 
ship between America and Japan, and I am proud indeed that 
I was a factor in the situation. I was made special Government 
agent to perfect their plan and see that it was put in working 
order ; and all the engraving the Japanese Government required 
was done here under my direction, with most satisfactory re- 
sults. 

I had pointed out to Mr. Ito, and also strongly urged, that 
our decimal monetary system was the best and simplest for 
Japan to adopt in establishing its own monetary system, and 
that our greenback currency and five-twenty bonds were good 
models for Japan to follow in its issues of securities. 

The Japanese Government afterwards acted in conformity 
with my earnest recommendation on the subject by adopting the 
decimal system and issuing similar currency and bonds, thus 
adopting our system in all respects ; and so making its formerly 
insular system conform to the monetary basis of other nations. 
From being walled in financially it thus placed itself in recip- 
rocal monetary relations with all the world. 

I may mention that the first bonds issued by Japan were pay- 



AMERICA GREETS JAPAN 251 

able in pounds sterling in London for an amount equivalent to 
ten millions of dollars, and these were negotiated by the Orient 
Bank of London, with the co-operation of my firm, and this loan 
was a great success. 

In considering the importance of the influence I exerted, par- 
ticular regard must be paid to the time at which I conferred 
with this Ito commission. It was a period of formation for the 
Japanese Government, as now constituted. The old circum- 
scribed method was passing away, and the new order of things 
was taking its place on a broad national basis, which has since 
opened Japan to the world at large, as it had never been opened 
before ; and rapidly made it a great international power — a 
power among the nations which is still growing with its own 
growth in all the elements of a high and advancing civilization, 
instead of being locked up within itself, as it was until Commo- 
dore Perry's treaty opened it to the commerce of the world. 

On the splendid results to Japan of this great event it is un- 
necessary for me to descant. But while Commodore Perry 
opened the gates of Japan to the nations, the adoption by Japan 
of our decimal monetary system was only second in importance 
to the Perry Treaty in opening the new era in the history of 
Japan. 

Prince Ito became one of the central figures in the world dur- 
ing the Japan-China War, and the final success of his cause 
was due to his sagacity and forethought. 

His continued success in diplomatic matters has since stamped 
him as one of the greatest statesmen in the world, if not the 
greatest. 

I have kept in touch with him by correspondence, and also 
by seeing much of him when he visited New York on his way 
to London as special ambassador to Queen Victoria's Jubilee. 

While my services to Japan were a free-will offering, I have 
been amply compensated by the many life-long friendships these 
have enabled me to form with the noted men of Japan, and, 
finally, by the great honor of receiving an Imperial Decoration 
from His Majesty, the Emperor, and also an Imperial diploma 
bearing his signature. 



252 AMERICA GREETS JAPAN 

When President Roosevelt sent our battleships to make a 
voyage round the world, the pessimists in many countries erro- 
neously looked upon the order as a challenge to Japan, and pre- 
dicted all kinds of disaster as a result. This false view was, 
however, soon corrected. 

Your august Emperor fully understood the situation, and the 
reception and entertainment accorded in Japan to both the of- 
ficers and the men of our Navy took the wind out of the sails 
of the adverse critics, and proved that both your Emperor and 
our President were good friends, and diplomats not to be sur- 
passed in their felicitous course relating to this memorable 
voyage. 

This National Commission from Japan, — coming here at this 
time in the interest of peace and commerce, — is the answer 
from you to us — from the Orient to the Occident. The only 
ammunition to be used in strife between Japan and the United 
States will be to see which can give the loudest salutes in honor- 
ing and welcoming the entwined flags of our respective nations. 

I shall be glad to do anything within my power to further 
the object of the visit of this distinguished delegation, and I 
bespeak for my fellow-citizens lasting good will and a regretful 
farewell. 

In saying " Good-Bye " we leave them in good hands, at- 
tended as they will be by many of the leading men of our 
Pacific Coast, whose pleasure and duty it has been to come to 
New York with them, the better to insure the success of their 
mission in this Atlantic region. 

To them will be given the privilege of waving a last farewell 
as the ship bears our visitors on the last lap across the Pacific. 
The very name of that ocean implies peace, and is therefore a 
fitting traveling path for our two countries — the Empire of the 
Rising Sun, and the United States of America — and may the 
existing harmony between them never be broken by a note of 
discord, but grow with their growth, and continue forever! 

After my speech I proposed the health of Prince Ito, and it 
was received and responded to with an outburst of enthusiasm ? 



AMERICA GREETS JAPAN 253 

thus showing the great popularity of the Prince with his people 
and also our own people. 

Yet alas ! only five days after this gratifying and cheerful 
interchange of good fellowship at this international meeting, 
the sad and startling news was flashed to us by cable that Prince 
Ito had been assassinated. 

Thus passed away in the zenith of his active career of states- 
manship, a great and famous leader of his Nation. Thus tragi- 
cally was extinguished a great and bright light — a power for 
the peace of Japan and the world — and his death is a loss not 
merely to Japan, but to all nations. It was indeed a cruel mur- 
der, and not only a national but an international calamity. 

With Ito's death the peace between nations is perhaps less 
assured than before, as he was to a considerable extent the 
balance wheel in his own government. This I have reason to 
believe from my personal knowledge. When it was feared that 
the sending of our warships round the world might prove a 
spark likely to kindle a war flame between the United States and 
Japan, I wrote to Prince Ito and assured him that it stood for 
Peace and not for War, and ought to strengthen rather than 
weaken our friendly relations, as President Roosevelt so in- 
tended. I suggested, too, that it would be a great delight to 
our President and people if the Emperor would ask President 
Roosevelt to allow the American fleet to stop at some one of 
Japan's ports. This invitation was given by Japan and gladly 
complied with by the United States, with the most happy re- 
sults, as we all know. The warm greeting that Japan gave our 
officers and men will never be forgotten, and, figuratively speak- 
ing, Japan shook hands with the United States across the broad 
Pacific. May the bond of friendship between them last for- 
ever! 



CABLE SENT TO HER HIGHNESS, PRINCESS ITO, TOKIO, JAPAN. 

The whole civilized world mourns the sad death of its great- 
est statesman and tenders sympathy to you and your people. 



254 [AMERICA GREETS JAPAN 

Though dead, his influence will live, and the tragedy of his de- 
parture will cement the friendship of your people and ours. 

Henry Clews. 

Tokio, 

Heartily appreciate your sympathy. 

Princess Ito. 



SHALL THE SUFFRAGE BE GIVEN TO WOMEN? 

Address delivered in the Metropolitan Temple, 14th Street and 7th 
Avenue, on Friday evening, November 19, 1909, under the auspices of 
the National League for the Civic Education of Women. 

I WILL try to answer the question, keeping in mind the 
memorable words of Abraham Lincoln, " With malice 
toward none, with charity for all," and I hope that my 
views will accord with your own. 

Men practically acknowledge that women are their superiors 
when they raise their hats to them; and in other forms of def- 
erence they recognize this superiority, and bow to the ladies. 

But if women should, like a flock of sheep, or, let me say, 
lambs, follow the revolutionary example of their sisters in Eng- 
land, the campaigning suffragettes, and succeed in their object 
of gaining the franchise — the right to vote — they would then 
be placed on an equality with men, and so lose the superiority 
over them which they now possess. 

Surely they do not wish to make this sacrifice, with the loss 
of deference and gallantry, on the side of the sterner sex, that 
it would involve, and the fading away of the small sweet cour- 
tesies of life of man to woman which would inevitably follow. 
Woman should never place herself where men, in a toast, could 
say, " To the ladies, once our superiors, but now our equals ! " 

With the ladies plunged deep in politics, and taking an active 
part in political campaigns and reform measures, it is easy to 
imagine how much their home life, and, in the case of mothers, 
their children, would be neglected. 

The child is father of the man; and who would care for and 

guide, and bring up to be worthy successors of their fathers, 

and our great men, the boys of the family, if their mothers left 

them to be looked after by others, or, still worse, left them to 

255 



256 WOMAN SUFFRAGE 

their own devices in their early years? There is no proper 
substitute for a mother's love and maternal care, in the training 
of children. The hand that rocks the cradle rules the world. 

Look, too, at the hazards, the risks, the physical danger that 
ladies would be exposed to at public meetings and the polls. 
Heated arguments and denunciation are inseparable from pol- 
itics, and we can easily picture a refined woman, dressed in the 
height of fashion, saying something in a speech, or conversa- 
tion, at a public meeting, to which some coarse and ignorant 
woman, or woman of ill repute, listening to her, might make 
objection in the most insulting language. 

Worse still might happen, if she made a spirited reply to 
such a woman, who would, perhaps, not hesitate to strike her 
and make shipwreck of her costume, with the possible result that 
she would go home with a black eye, a damaged nose, torn 
garments and dishevelled hair, and even her hat not on straight, 
but alas ! all awry, a terrible thing for a woman, as every woman 
knows. 

Politics makes strange bedfellows, and in politics all are 
equal, good, bad and indifferent; and bad women, or women 
willing to sell their votes, would probably be far more numerous 
and controlling at all political assemblages, and the polls, than 
good women, if we had woman suffrage. Moreover, the bad and 
corruptible women would generally be under the control of 
politicians of the male sex, and be quite willing to do their 
dirty and corrupt work. In politics we cannot choose our 
company, all citizens having equal rights and privileges, and 
no one can be excluded from a public meeting. 

All this would be very demoralizing socially. It would cause 
women to more or less lose their feminine graces and natural 
refinement, and tend to make them masculine, while this usurping 
of masculinity by women would exert a bad influence upon men 
in the opposite direction, making them less masculine, and con- 
sequently more effeminate than they were before women be- 
came their political equals and rivals. 

By becoming masculine, in any degree, women would sacrifice 
much of their greatest charm, and also violate a law of nature. 



WOMAN SUFFRAGE 257 

Women should be content to let men do men's work in politics, 
for men alone are fitted for it; and in politics woman is out of 
her proper sphere. 

She not only should be but should consider herself above 
politics, and be glad to leave voting to men; and be content 
to adorn her home, and, when married, take pride in mother- 
hood, and the generation to follow her. How many great men 
have attributed their success in life to their mother's training 
and teachings, we can learn from their histories. 

This idea was fitly, and I may say beautifully, expressed and 
enlarged upon by Mrs. Edith Rockefeller McCormick, a daugh- 
ter of John D. Rockefeller, in a magazine article entitled, 
" What My Children Mean To Me." To her motherhood means 
" the fulness of living " and brings to every woman the op- 
portunity to be a " queen." 

" In the capacity of mother," she writes, " the woman of 
beauty, of talent, of charm, of executive ability, of strong con- 
victions, of artistic temperament, of high ideals, of broad in- 
telligence, of commanding presence, of warm sympathy, of 
keen perception, of deep feeling, of noble ambitions, of love 
of humanity, finds her greatest glory." 

Far from hampering or restricting the activities of clever 
women, children lead to a higher purpose and a broader use- 
fulness in life, Mrs. McCormick asserts. She further says: 

" It is only after we ourselves have felt, have suffered, or 
have enjoyed, that we can say, ' I know.' Why then should 
we not welcome the unfolding of the wonderful new world that 
comes to us after marriage and receive the fulness of the 
Creator's great gift? " 

What a vivid contrast this lady's views, and contented home 
life, present to the discontented and exciting hurly burly life of 
the typical suffragette, with her badge, or war cry, " Votes For 
Women ! " 

Women in demanding the right to vote — and such women are 
very far in the minority — demand all the political rights of 
man, and an equal division of the sovereign power he possesses. 
So sovereign power is what they are contending for. To give 



258 WOMAN SUFFRAGE 

it them would be to take away a corresponding power from 
man, and leave him shorn of his sovereignty. This, of itself, 
would be equally in j urious to men and women, and demoralizing 
to society. 

The natural law, the natural instinct, is that man shall be 
the protector of woman and that she shall be his helpmate, and 
all history and tradition verify this position. The teachings 
of the Bible, in both the Old and New Testament, are very 
clear and emphatic in declaring and maintaining it. 

The word " male " in the Constitution of the United States, 
applied to voters, accords with this natural law and immemorial 
custom, and the word " female " is not to be found in that in- 
strument. Nor is it to be found, in that connection, in the 
original Constitution of any of the States, although Colorado 
and some other States have since admitted women to the suffrage, 
in whole or in part. 

But it is shown by the statistics of Colorado that women tire 
of politics in time, and many who went to the polls when the 
right to vote there was first extended to them, because of the 
exciting novelty of the event, have since ceased either to attend 
political meetings or to take the trouble to vote. Thus their 
former eagerness to vote has subsided into supineness, or abso- 
lute indifference. The main cause of this change of feeling 
was the unpleasantness and rough treatment they often met 
with in practical politics, particularly in connection with the 
scramble for office. 

The knowledge, from experience, too, that many women could 
be easily induced to sell their votes, or allow themselves to be 
controlled by men in voting, discouraged them. It would be 
the same, to a greater or less extent here, presumably, if the 
woman suffragists were to succeed in their object. We may 
rest assured, however, that here, as in Colorado, the good women, 
and especially the most refined and cultivated, would be among 
the first to drop out of the ranks in disgust with political life 
and its mixed company. 

One great and strong and practical political reason why men 



WOMAN SUFFRAGE 259 

exclusively should have voting power is that, in the event of 
war, the men could and would join the army and navy and fight 
for their government, whereas women obviously neither could 
nor would do so. There would be Florence Nightingales for 
the camp hospitals, but no Joan of Arcs. 

I note, however, that Dr. Anna Shaw, President of the Na- 
tional Woman's Suffrage Association, told the University of 
Minnesota recently that she could make Minneapolis the model 
city of the Union with a hundred women on its police force. 
The criminal, she argued, needs mothering. She would avoid 
hurting the feelings of those in penitentiaries, even if they were 
thieves, forgers and murderers. But handling such criminals 
with kid gloves would be hardly consistent with an effective 
police service. 

I assume that the suffragettes are patriotic, and would not 
wish to do anything to weaken the foundation and structure 
of our Government, or indeed that would not tend to strengthen 
both, so I ask this question: In what way, or in what degree, 
would female suffrage — that is, votes for women — tend to 
strengthen, or benefit them, or do good for the men or women 
of the country, or work for the permanent welfare of the na- 
tion? 

That woman suffrage has become a great and engrossing, as 
well as disturbing question in England, we all know from the 
newspapers, and that it is rapidly becoming so in this country 
is very apparent. Therefore it is discussed with much heat, and 
energy and some acrimoniousness, in both hemispheres; but how 
best to deal with this new development of our complex civiliza- 
tion is a problem yet to be solved. 

The resolution of some of the convicted London Suffragettes 
to starve themselves to death in prison, if they were not lib- 
erated, was manifested with such unmistakable determination 
that the government authorities were actually forced to liberate 
them to prevent them from becoming martyrs to the cause by 
dying on their hands. They absolutely refused to eat, and even 
turned up their noses when tempted with such dainties as candy 



260 WOMAN SUFFRAGE 

and ice cream. This indeed showed the strength of their resolu- 
tion. But in Birmingham's prison they were fed by the stomach 
pump. 

Such martyr-like self-denial alone shows how strong a hold 
the craze for woman suffrage has upon them; and these women 
are drawn from all classes of society, high and low, a daughter 
of the late Lord Lytton, British Ambassador to France, being 
one of the most enthusiastic of them. A movement so earnest 
and widespread, however mistaken, or unreasonable, calls for 
wisdom and forbearance in dealing witli it, and the policy of 
silence and non-interference is probably better calculated to 
mitigate it and let it wear itself out, than any aggressive course, 
except the laws are openly violated. 

Mrs. Zangwill, one of the English leaders of the " Votes 
for Women " circus, ridicules the masculine distaste for a possi- 
ble petticoat government, in the future, and says the present 
absurd " Trowsers Government " is equally intolerable to many 
women, who are urging — as a logical and satisfactory com- 
promise — " The Divided Skirt Government." This is calcu- 
lated to provoke a very broad smile. 

Another, and more desperate member of the clan, publicly 
avowed that she would rather die than be without a vote, which 
reminds one of Patrick Henry's exclamation, " Give me liberty 
or give me death ! " 

But a skeptical and unsympathetic bystander at this suffra- 
gette meeting raised a titter by some covert allusion to hair dye. 

That the London suffragettes were reckless and disorderly 
crusaders, was shown by the way they acted in the streets, and 
chained themselves to the railings in front of the Prime Min- 
ister's official residence in Downing street and the houses of other 
Cabinet officials, and also to the screen work in the gallery of 
the House of Commons, to which they surreptitiously gained an 
entrance. Their locked chains had to be cut through with files 
before they could be released. When lovely woman stoops to 
folly of this kind she does herself an injustice. In this country, 
so far, no such scenes of disorder have been witnessed, and no 
suffragettes have been conveyed to the police courts, and it is 



WOMAN SUFFRAGE 261 

to be hoped that this good record will never be broken. We 
live in stirring times, however, and the campaign for woman 
suffrage threatens to become much more active than it has been 
hitherto. 

The Duke of Newcastle, who is now making his ninth visit 
to this country, and who has watched the suffragette movement 
very closely in England, expresses himself in the strongest 
terms against woman suffrage, and says, as I say, that it is a 
foe to domestic life, and would, if granted, prevent mothers 
from caring for their homes and children and training their sons 
to be our future leaders of men. Instead of guiding them in 
the way they should go, they would too often neglect them for 
politics. But in thus generalizing it must of course be borne 
in mind that circumstances alter cases, and that some women, 
at least, however resolute as suffragettes, would have a sense 
of duty so strong that even the magic of " Votes for Women ! " 
would not cause them to seriously neglect their homes and chil- 
dren. 

The establishment of suffragette headquarters on an ambi- 
tious scale in New York — covering an entire floor of nine 
rooms on Fifth Avenue at 42d Street — and the recent display 
of suffragette activity at Newport, testified to the earnestness 
and enthusiasm of very many women, some of high social posi- 
tion, in this suffrage movement; and doubtless most of them 
really believe that they are working in a good cause — working 
to uplift woman to a par with men by giving her an equal right 
to vote. 

In this they have no suspicion that, if they succeed, their suc- 
cess would really involve what I have called a sacrifice for 
woman — the sacrifice of exchanging their existing superiority 
for equality. 

Politics and political rights could in no way add to the glory 
of woman, but would detract from it, and the homage and ad- 
miration with which man regards her. Her love and beauty, 
her tenderness and devotion, her self-sacrificing affection for 
her children, and others near and dear to her, her bright in- 
telligence, taste and sympathy, her talents, culture and charm 



262 WOMAN SUFFRAGE 

of mind, and her modesty, grace, refinement and thousand win- 
ning ways, are the attributes that glorify woman, and endear 
her to man. 

So why should woman seek to enter the foul arena of 
politics by winning the right to vote? She would do much 
better, and be much more at home, in winning hearts. In that 
she is, and always has been, and always will be, unrivalled, 
and she will be wise to limit her prowess to her own sphere 
in which she is the undisputed queen. 

One humorous proposition, however, in relation to the women 
suffrage campaign, is that of a St. Louis priest, who wishes to 
encourage large families by Family Suffrage, his motto being 
" no babies, no ballots." He would give every family an addi- 
tional vote for every child born into it, the mothers to vote for 
themselves and their daughters and the fathers for themselves 
and their sons, unless the mother wished the fathers to vote for 
all. But childless women would be disfranchised. This last 
provision would no doubt meet with the entire approval of ex- 
President Roosevelt. 

The American leaders of this suffrage movement have been 
working harder this year than most people imagine. After be- 
ing as busy as bees here they went to London to take part in the 
International Suffrage Alliance Congress there, and when that 
was over they hurried back to attend the Congress of the Inter- 
national Council of Women at Toronto, which lasted two weeks, 
the largest and most spirited of the meetings being that devoted 
to woman suffrage, when speakers from Italy, Belgium, Nor- 
way, Australia and Canada, described the woman franchise 
gains in those countries and dilated on the promising prospects 
of further gains through their determined efforts. 

Lady Aberdeen, wife of the Lord Lieutenant of Ireland, who 
presided over this suffrage meeting, said that the franchise 
should be given to women in order that they might raise all 
the ideals of government; and she added that she urged this 
" especially for the sake of the working women on whom legis- 
lation falls so heavily because they can't express themselves at 
the polls." 



WOMAN SUFFRAGE 263 

But she was entirely mistaken on both points. If women had 
votes they would in my opinion, find their efforts to raise all, 
or any, of the ideals of government abortive, and the laws do 
not, either here or in the United Kingdom, bear heavily, or at 
all, against working women, or women in general. A husband 
has no share in his wife's property. All lawyers will tell you 
that women are better protected than men by law. 

There were hundreds of women delegates from different coun- 
tries at this Toronto Congress, and they approved the resolu- 
tion adopted at the Berlin Congress of 1904, pledging the coun- 
cils " to work for the woman's franchise on the same terms as 
exercised by men." 

No sooner was this congress adjourned than the leading 
women delegates hurried off to Seattle, in the State of Washing- 
ton, to attend the annual convention of the National Woman's 
Suffrage Association. At Chicago they met a host of other 
delegates and traveled the rest of the way by a " suffrage 
special " train. 

At Seattle and Spokane they had a whirlwind reception, and 
the Spokane Chamber of Commerce voted $500 to entertain 
them. There they held a mass meeting in a Methodist Church, 
with the Mayor of the city presiding, and then went on to 
Tacoma. Finally they were crowned with glory by a " Suffrage 
Day " at the Alaska-Pacific Exposition, when they threw up toy 
balloons labeled " Votes for Women ! " This was splendid, yet 
it only whetted the suffragette appetite for something more sub- 
stantial — particularly their greatest object, "Votes for 
Women ! " 

But women are not entirely alone in their campaign for the 
suffrage, as there is in both London and New York a " Men's 
League for Woman Suffrage," with some very reputable men 
among the members, especially in New York, with George Foster 
Peabody, a retired Wall Street banker, as president. So the 
advocates of Woman Suffrage are not hiding their light under 
a bushel, but preparing to carry on the war, either to victory 
or to the bitter end. 

The question arises do the women agitating for votes reflect 



264 WOMAN SUFFRAGE 

sufficiently on the legal rights and privileges they now enjoy, 
and compare them with the absence of many of those rights and 
privileges up to a recent period in the world's history. To 
show that the propert}^ rights of married women are now as 
strictly guarded as those of men, and even more protective, it is 
only necessary to say that a married woman owning the house 
she lives in, can, if she so choose, turn her husband out of it, 
and he has no recourse. But if a married man were the owner 
of a house he lived in and acted so towards his wife, the law 
would make him provide for her suitably elsewhere, and, later, 
she would probably get alimony and counsel fees in a divorce 
suit. 

Woman, once virtually a slave, and, if married, with all her 
property the property of her husband, is already emancipated, 
and she has no need of the suffrage; and, if she had it, the 
right to vote would do her no good, or infinitely more harm 
than good. 

This she would probably come to recognize in the end, and 
regret that she had ever acquired it. Woman should be proud 
of her position as it is, and content with being " a thing of 
beauty and a joy forever." 

This recalls to me Sir Walter Scott's fitting description of 
her charms: 

" O ! woman in our hours of ease, 
Uncertain, coy, and hard to please, 
And variable as the shade 
By the light quivering aspen made, 
When pain and anguish wring the brow, 
A ministering angel thou ! " 

As a ministering angel she is too superior a being to take an 
active part in political warfare, and the more experience she 
might get of it the less she would like it. 

As a married man, and a sincere friend and admirer of the 
ladies collectively, I advise them all to leave politics and voting, 
with all their rough and tumble work, and battling for the 



WOMAN SUFFRAGE 265 

spoils, to men. They — the men — are made of commoner 
clay than the sirens and ministering angels to whom they raise 
their hats in acknowledgment of their superiority to themselves. 

If the suffragettes will only lay this flattering unction to their 
souls it ought to reconcile them to remaining as they are — 
voteless, but a perpetual blessing and source of inspiration and 
happiness to man; and it is in the nature of man to gladly 
worship at their shrine, and labor for their welfare and happi- 
ness. Moreover, the world is not unmindful of the great 
achievements of women in literature, art and science. They 
are the most prolific novelists of the age, and Rosa Bonheur's 
" Horse Fair " is one of the most famous paintings in the 
world. 

The political sovereignty of man, to which I have referred, is 
entirely compatible with the admitted superiority of woman. 
But there is one great exception where woman possesses the sov- 
ereign power by her own inherited right, and that is when she 
occupies a nation's throne, as in the case of the reigning 
Queen of Holland. A woman may also share the throne and, 
nominally, sovereignty, with her husband, if he is a king or 
emperor, as at present in England and Russia. The one is 
Queen of England because she is the wife of the King, and the 
other Empress of Russia because she bears the same relation 
to the Czar. But neither the Queen nor the Empress would 
continue to occupy the throne if her husband died, and neither 
is possessed of any political power or authority. The eldest son 
of each monarch would then succeed to the throne, but if a 
minor, his mother might be appointed Regent, as recently in 
Spain during King Alfonso's minority. 

Thus, when Queen Victoria, who came to the throne by in- 
heritance, married Prince Albert, he shared the throne with her, 
but was, officially, only Prince Consort, and had no share what- 
ever in her sovereignty, and the same is true of the husband of 
the Queen of Holland. 

History shows that queens, both good and bad, have generally 
made great names for themselves, from Queen Cleopatra down 



266 WOMAN SUFFRAGE 

to modern times, notably the absolute Catherine the Second, and 
Sophia of Russia, Isabella of Spain, Maria Theresa of Austria, 
and Elizabeth and Victoria of England. 

England has had four queens, regnant, that is, in their own 
right — Mary and Anne, Elizabeth and Victoria. The other 
British queens were merely consorts of their husbands, the kings, 
and when they survived their husbands they left the throne as 
queen dowager. Women were made rulers in very remote times, 
ancient Egypt having had four queens, but with names so un- 
pronounceable that I forbear to mention them. 

Woman is admirably fitted for a throne, and as a queen or 
empress can wear a crown, and shine amid the pageantry of a 
court, with even greater lustre than a king. The monarch's 
position suits her taste and befits her grandly, and her personal 
superiority harmonizes with her sovereignty. Crowned as a 
sovereign she would be in a congenial atmosphere of homage, 
honor and grandeur and presumably supremely happy, but not 
necessarily so, for " uneasy lies the head that wears a crown." 

But, as a sovereign on the throne it can be seen that her 
position would be entirely different from her position of sov- 
ereignty as a woman with a vote, mingling with the rabble at 
caucuses and polls, and trailing her skirts in the dirt and gutter 
of politics. While she would adorn a throne and naturally glory 
in a crown, she would find nothing to adorn, and be wasting her 
sweetness on the desert air, in politics. Political associations 
would tend to lower her. The franchise would give her the 
wrong kind of sovereignty. A throne would be more appro- 
priate, and much more to her taste, and as we all know, she 
would glory in it. On the other hand, she would, if educated 
and refined, soon learn to despise as degrading much of what 
she, — ■ as a suffragette, — now clamors for in political life, and 
the Bible tells us we cannot touch pitch without being defiled. 

As there is much pitch in politics, I predict that, after due 
experience, her watchword would no longer be " Votes for 
Women ! " but rather, " Home, Sweet Home ! " 

It is in recognition of all the objections to woman suffrage 
that a large number of American women of social position have 



WOMAN SUFFRAGE 267 

united to form a Woman's Anti-Suffrage Association to combat 
the efforts of the suffragettes in New York and other cities, and 
their efforts may prove an effective antidote to the suffragette 
movement. At any rate, it will serve to show the advocates of 
" Votes for Women ! " that there are two sides to the woman 
suffrage picture, and that most women — God bless them — 
are opposed to " Votes for Women! " 

Most of the arguments of the suffragettes are gross exaggera- 
tions, or misstatements of fact as to woman's position in relation 
to man, the government and the suffrage, and could be easily 
controverted by any dispassionate, impartial and competent 
critic. 

Their severest critics are to be found among anti-suffragist 
women. These point out that woman has an assured social 
and industrial position, with all the legal rights and protection 
that man has, and even more, except the voting power in the 
States that have not conferred it upon women. 

Moreover the State, both locally and nationally, gives them 
exemption from duties that men may be legally called upon to 
perform. One of these is jury duty; another is enforced 
service in the army or navy, through drafting in time of war. 

Women are nowhere more honored and respected than in 
America, and they have equal access with men to all professions, 
industrial occupations and educational and religious institutions. 

As women are not liable to be called upon, by law, to serve 
the State in any way, there is no reason why the State should 
give them the same right to vote that men, who are liable to 
serve, possess. 

Men have, governed this country ever since it was discovered 
and settled. They fought for and established this great Re- 
public of ours, and made it the foremost nation in the world, 
or at least, one of the greatest of nations. 

What fault have women to find with this government by men 
— with this result of the courage, labor and enterprise of men ? 
Could women have done any better, or as well? Woman in her 
own sphere is not merely useful and ornamental, but a blessing. 
She is an angel in the house, but, if she had a vote, politics 



26$ WOMAN SUFFRAGE 

would demoralize her, notwithstanding all arguments to the con- 
trary. 

Appetite grows by what it feeds upon, and if women were 
to become voters they would naturally become office seekers, 
either for themselves or their friends. They would, in other 
words, acquire, and be desirous of acquiring, political influence, 
and be more or less eager to use it for this purpose. 

They would therefore compete with men for office, and pre- 
sumably some of them would succeed in getting it. But what, 
in such cases would become of their homes? And we can im- 
agine at what a sacrifice of modesty and delicacy they would 
purchase success. 

It would seem that in the case of successful ones — the women 
office-holders — their husbands would have to take care of their 
homes and children ; and the women would learn more and more 
to dominate the men, and in consequence, make them more and 
more subservient and effeminate, while themselves becoming 
more and more masculine. Thus they would, I repeat, be re- 
versing the order of Nature and destroying their homes and 
their domestic life. 

Women in politics, as in business, would also, in time threaten 
to crowd out the men, just as the university girls are already 
threatening to crowd out the university men in this country. 
The first woman admitted to a college here made her entry at 
Oberlin in 1833. She made the world wonder. But now sixty 
per cent, of the students in all our colleges open to them are 
women. In seven of the thirteen Western universities the 
women outnumber the men this year, while Nebraska, Minnesota , 
and California have nearly twice as many women as men 
students; and Stanford University, to protect the men from ex- 
clusion, has just decided to limit to five hundred the number of 
women that may be admitted in each year. 

Tufts College, too, has had such an overwhelming rush of 
women students that, to prevent its becoming a woman's college 
exclusively, it has asked for a special fund of $250,000 so that 
it may segregate the women from the men. Who can say that 



WOMAN SUFFRAGE 269 

if women entered into active politics as voters they would not 
similarly compete with, or crowd out, men? 

A woman's greatest charm, if not her crowning glory, is her 
modesty, and this should never be sacrificed, in any degree, for 
politics, office, or anything else. Yet how could she preserve 
it in the rough and tumble strife and tobacco smoke of the often 
dirty and disreputable politicians she would have to associate 
with? The suffragettes are not so much in need of votes as of 
protection against themselves. 

A great deal of unnecessary difficulty arises from the desire 
of some women to be like men. They seem to envy what they 
think is the freedom and independence of men — something 
which men do not possess in the degree which women imagine. 
This desire is a fundamental error, and tends to lower women 
in the estimation of her own sex, and of the other also, whose 
admiration she naturally and properly enjoys. Stop for a mo- 
ment and ask yourself the question: Is the masculine woman 
liked any better than the effeminate man? There is nothing 
more admirable in the Universe than a noble woman; nothing 
more sacred than a good mother; and if women would simply 
glory in the fact of being women, making the establishment of 
a good home and good family their first purpose in life when- 
ever possible, and stop trying to emulate men, they would do 
far more for their country and win far more love and respect 
than they can ever attain by capture of the ballot. 

Let woman stick to her natural sphere ; let her rej oice in the 
fact that she is a woman; let her worship womanly standards; 
let her throne remain firmly established in the home protected 
by the man of her choice and let her stop aiming to be manly. 
Have you ever considered how few of the best mothers are 
asking for the vote? No doubt in some parts of our complex 
political organization woman's influence can be used to great 
advantage, especially in educational and philanthropic activities 
where her keen perception and sympathy make her a most ef- 
ficient helper, if not an actual leader among men. Already 
women have a powerful indirect influence in such affairs, and 



270 WOMAN SUFFRAGE 

their entrance into more direct control would undoubtedly be 
beneficial. But this is not woman suffrage, which is a delusion, 
and cannot provide all the good things innocently promised by 
its promoters. When these are attained they will come by means 
other than woman suffrage, the consummation of which can only 
result in impairing womanly standards and confusing political 
issues. Woman will always have more power as a mentor in 
public life than as a voter. 

The suffragettes, I repeat, are not so much in need of votes as 
they are of protection against themselves and their leaders — it 
seems to me to be a case of " the blind leading the blind." They 
are lost in an endless labyrinth of false notions of life, which, if 
persisted in, cannot but tend to the gradual extinction of 
spirituality, tenderness and gentleness in our superb American 
womanhood. If women gain the suffrage they will lose every- 
thing that Christianity and civilization have done for them. 
God forbid that such a calamity should ever befall our Na- 
tion ! 



INDIVIDUALISM VERSUS SOCIALISM 

Address delivered before the students of Harvard University, at 
Cambridge, Mass., on December 7, 1909. Its main arguments were 
heard by the students of Cornell University, and were also spoken 
from the pulpits of Plymouth Church, Brooklyn, and the Metropolitan 
Temple, Manhattan, at the request of their pastors, the Reverend 
Newell Dwight Hillis, D.D., and the Reverend John Wesley Hill, D.D. 

IT seems like presumption on my part that a business man, 
like myself, should come to this great seat of learning, — 
one of the best in the wide world, — and attempt to teach 
the bright young men gathered in this Hall. Your professors 
are famous for their knowledge, and their ability to transmit 
that knowledge to others. They know the theories of political 
economy much better than I do. But it may be possible that a 
few words from one who has studied events for fifty years from 
a practical standpoint may prove both interesting and instruc- 
tive. 

I would like to know if the young men who are students at 
this famous University, and who declare themselves Socialists, — 
and I put the question to all of you, — whether their desire to 
secure a higher education is based purely on the hope of bene- 
fiting their fellow men, or their aim or hope is, that by a higher 
education, they can reap benefits for themselves ? I venture to 
say that nearly a full hundred per cent, are striving with all 
their might to fit themselves to win in the struggle of life, indi- 
vidual success and fame, and to individually acquire also the re- 
sultant compensation that is represented by cash, and the com- 
forts and luxuries that wealth can provide. The aim to secure 
and enjoy such luxuries is worthy of the ambition of every stu- 
dent of fair Harvard. Some of them are working their way 
through college, and are entitled to great credit for their strug- 
gle, and they merit high praise and commendation. 
271 



272 SOCIALISM 

The very fact that they are ambitious, and that they undergo 
hardships to further their ambition, proves they do not rank as 
Socialists, and, therefore they should not enlist under false 
colors. 

They aspire to become leaders of men, and to uplift them- 
selves above the level of the masses. Individualism is their lead- 
ing characteristic whatever they mistakenly claim as their creed, 
and I hope and expect that many of them will become great 
captains of industry in the not distant future. 

The athletes of Harvard are held in high respect in the State 
in which I live. Why do they train hard, and deny themselves 
many of the good things of life ? Is it for the public good, — 
the general success of all the people of the country alike? It 
would be ridiculous to so assert, for we all know the contrary is 
true. It is for the honor of their college, entwined with personal 
pride. They are imbued with the courage that is determined to 
win. As Socialists they should be willing that each college 
should break even in athletic events. As Individualists they 
should strive to have Harvard win every event, if possible. 
Now, to which class do the Harvard athletes belong? 

It is to Individualism, to individual effort on the part of our 
young men of talent, that we must look for our future success 
and prosperity. The opportunities for the energetic young col- 
lege man are just as great as they ever were. We are looking 
for young men of merit to aid in the development of our tre- 
mendous resources, and the constantly increasing expansion of 
our enterprises. 

The big men of the country are all at the present time looking 
for young men of ability from our universities, to do the work 
that they have been doing, to relieve them of the great burdens 
of business, which, as they grow older, they have to unload upon 
others. 

I have heard of " Harvard indifference." But where is your 
indifference? I find none. What I find is individualistic en- 
thusiasm, that enthusiasm which comes from within, which fires 
each individual heart to wonderful achievement. In your 
studies, your clubs, your athletics, your college papers, and all 



SOCIALISM 273 

your varied activities, Harvard stands pre-eminent as the great 
educational institution that encourages Individualism, the fullest 
development of the individual student and man ; and she is fully 
justified. For who has not heard of Oliver Wendell Holmes 
and his nephew of the same name on the U. S. Supreme Bench, 
Senator George Frisbie Hoar, Senator Henry Cabot Lodge, 
President Charles William Eliot, James Russell Lowell, and 
President A. Lawrence Lowell, Major Henry Lee Higginson, 
(who built this beautiful club-house for you,) and that most 
illustrious graduate, Theodore Roosevelt? 

In order that I may present a clear understanding of my view 
of the subject, it is only fair, in the first place, to state that the 
system of Individualism which I shall endeavor to uphold is 
based upon common sense and justice. I hold it to be superior 
in every sense to any of the various plans of Socialism offered by 
its advocates. By this I do not mean Individualism in the ex- 
treme sense of the term, for, as we all know, in no civilized coun- 
try and under no form of government whatsoever, does, or can, 
extreme Individualism exist. 

In the world of economics and politics Individualism has a 
distinct meaning, as a name given to the theory of government 
which favors the non-interference of the State in the affairs of 
individuals. It has also been well defined, as the private owner- 
ship of the means of production and distribution, where compe- 
tition is possible; leaving to public ownership those means of 
production and distribution in which competition is practically 
impossible. 

It will, then, be at once apparent that, in the consideration 
of the forces helpful and necessary to society, the individualist 
believes that that competition which encourages merit and de- 
velops skill should remain paramount. And right here the issue 
is made, between Individualism and Socialism, the Socialist 
denying that competition is beneficial to society, but contending 
rather that it is a deleterious and harmful force. 

Upon this issue, so joined, I stand firmly in favor of the 
principle of competition, and that system of Individualism which 
guards, protects and encourages competition. ' It is that system 



274 SOCIALISM 

of government under which we live to-day, — a government of 
the people, by the people and for the people, — the United States 
of America — a free system of government, in the best and 
broadest sense of the term. 

Under this free system of government, whereby individuals 
are free to get a living or to pursue wealth as each chooses, the 
usual result is competition. Obviously, then, competition really 
means industrial freedom. Thus, anyone may choose his own 
trade or profession, or, if he does not like it, he may change. 
He is free to work hard or not; he may make his own bargains 
and set his price upon his labor or his products. He is free to 
acquire property to any extent, or to part with it. By dint 
of greater effort or superior skill, or by intelligence, if he can 
make better wages, he is free to live better, j ust as his neighbor 
is free to follow his example and to learn to excel him in turn. 
If anyone has a genius for making and managing money, he is 
free to exercise his genius, just as another is free to handle his 
tools. 

In this primary outline of the free system of Individualism, 
it is well also to consider the good side of freedom or Individ- 
ualism. It is an axiom, well established, that the freer men 
are to choose their work and to use and enjoy its results, the 
more work they are willing to do. Their energy and enterprise 
are called out, their wits sharpened, their hopes stirred. If any- 
one wins unusual success, others are encouraged to try better 
methods. If an individual enjoys his money, gained by energy 
and successful effort, his neighbors are urged to work the harder, 
that they and their children may have the same enjoyment. 

Thus, everyone accomplishes more in a condition of freedom 
or Individualism, and the whole nation is richer, than if custom 
or a Socialistic community fettered and restricted men, and com- 
pelled them to work according to rule. With matured individ- 
uals, this is on the same principle that children enjoy their sports 
better, when left to themselves, than if a parent or teacher were 
to meddle and make rules for them. 

I believe that it can be stated, as an established fact, that 
whenever men are, as individuals, free to work, to earn and to 



SOCIALISM 275 

save and use their earnings as they deem fit, the capable, the 
industrious, the temperate and the intelligent everywhere tend to 
rise to prosperity. The skilful are always in demand and at 
good wages. And remember, that a day's wages never pur- 
chased so much in supplies as it does in the United States, 
where we use the individual or competitive system of work, be- 
cause high as prices are, wages are still higher. 

As a further part of this summary of Individualism and com- 
petition, let us also add the moral side, for it is a considerable 
and important item. When men labor, earn or save with per- 
fect freedom, they develop many moral qualities, such as pa- 
tience, self-reliance, self-sacrifice, venturesomeness, integrity, 
generosity and respect for others' rights. 

If a Socialistic committee of the wisest men could manage and 
make rules for the rest, and provide for everyone's necessities, 
men would not acquire or exhibit these sterling qualities of man- 
hood, as well as they would by being thrown upon their own 
resources. 

We know this, also, from the fact that the strongest characters 
have been worked out in brave and patient competition and con- 
flict, often under difficult circumstances; whereas the men who 
have never been thrown upon their own resources rarely amount 
to anything. 

After this preliminary description of the worth and salient in- 
fluence of Individualism, under which our country has grown to 
be the greatest nation of the world, let us now turn to Social- 
ism — a system which, if adopted, would call a halt to our 
progress, tear down our established institutions, and turn our 
great prosperity into ruin and decay. 

It is difficult to tell just what is meant by Socialism in the 
more modern sense of the term. 

It has appeared in the United States under five different and 
almost totally disconnected forms. It has appeared as a move- 
ment towards the establishment of Socialistic communities or 
communisms; it has appeared as Fourierism, as German or In- 
ternational Socialism, as Nihilism and Christian Socialism. 

Prof. Mallock, the eminent English writer, in his lectures in 



276 SOCIALISM 

New York, made a careful analysis of Socialism, and exposed 
its plausible sophistries, some of which, Socialists boast, are 
grounded on our defined principles of political economy, which 
the learned writer asserts are rather incomplete. It may be ad- 
mitted that this is so, and that fuller and clearer distinctions 
could well be added to our text books on the subject. But, 
joining the issue in a clean-cut way, between Individualism and 
Socialism, obviates all necessity at this time of further consider- 
ing such distinctions, and clarifies our respective positions in 
this debate. 

It was noticeable that, during the delivery of these lectures, 
hints and remonstrances were freely thrown out that the struc- 
ture that Dr. Mallock was attacking was not Socialism at all, 
in the modern acceptation of the term, but something else that 
had long ago been abandoned. 

Now, while I have no unfriendliness whatever with the honest 
Socialist (mistaken, deluded and sadly out of place in this grand 
Republic, as he may be), I do say, that this position is but too 
often the wily subterfuge, sought to be taken advantage of by 
the insincere agitator or pretended reformer, when he sees that 
he is beaten. His invariable answer to an irrefutable argument 
is: "Oh, that which you talked about is not modern Social- 
ism! " 

For the purpose of this discussion, however, we can agree that, 
as contradistinguished from Individualism, Socialism opposes 
and denounces competition as an injurious and unnecessary force 
in society, and advocates the collective ownership, through the 
State, of all the means of production and distribution. 

Socialists would, in other words, fence up the great field of 
free opportunity, deaden all incentive or inspiration for great 
achievement and not only curtail, but wholly remove, the right 
to compete and excel, and make it impossible to write " success " 
as the result of individual effort. 

Just think of it ! Why the very thing that the Socialists at- 
tack, as untenable and wrong in government — individual com- 
petition — has done more than anything else to make us what we 
are as a nation, to-day; has kept alive the precious fires of lib- 



SOCIALISM 277 

erty and freedom and has preserved the institutions of our coun- 
try. Take away the spirit of Individualism from the people, 
and you at once eliminate the American Spirit, — the love of 
freedom, — of free industry, — free and unfettered opportunity, 

— you take away freedom itself ! 

And right here, I take the position and shall ever contend, 
that the United States (of all countries in the world) is no place 
for Socialism. Let us never forget that it was founded by the 
wisdom and patriotism of the Fathers of the Revolution, and 
that it is blessed with a Constitution, framed by men who loved 
individual freedom and national liberty, and who risked their 
lives and sacrificed their property in the struggle to overthrow 
injustice and oppression and achieve independence and individ- 
ual equality. Let us not forget its past one hundred and thirty 
years of eventful history, replete as they are with many chapters 
of severe trial, over all of which it has ever risen superior. This 
splendid history has placed our system of government beyond 
the line of experiment, and raised it to such an elevation of rec- 
ognition and respect, that it now ranks as the highest among all 
the nations of the earth. 

Born of the spirit of resistance to oppression, with the broad- 
est and freest constitution that the world has ever known — a 
land of freedom and equality in the best and'most liberal sense 
of the term — it would seem that the sincere lover of liberty and 
equality could ask no better home than this democracy of ours 

— whose glorious flag, floats over eighty-four millions of pros- 
perous and enlightened people. 

To further add, the term " contented people " might, perhaps, 
not be a strictly true assertion, and neither would it, in my opin- 
ion, be a desirable one to use ; for to the spirit of discontent and 
ambition, so predominant in the American character, are due 
largely the grand achievements and the remarkable progress and 
advancement of our nation, in all things that make for great- 
ness, strength and public welfare. However, we must be 
careful to draw a plain line of contradistinction, between that 
discontent which is really the mainspring of human activity; 
and which, appreciating the solidity and soundness of our foun- 



278 SOCIALISM 

dation, aspires to build thereon to the highest ideals of perfec- 
tion and success, — and that misguided or malicious discontent of 
Socialism, which arrays itself as an enemy of all civilized forms 
of government and seeks their utter destruction. 

We can well understand and appreciate, how, in a country 
ruled by a despot, whose heel of oppression and tyranny is ever 
on the necks of the down-trodden people, the feeling of the 
masses, who, desiring some measure of free action and equality, 
would revolt against such conditions, and seek a reorganization 
of society. They would, naturally, look as far away as they 
could from such government of despotism — the only one they 
had ever known — to the other extreme — a country where the 
State should own all the land and capital, employ all the people 
and divide everything, share and share alike, among the com- 
munity. 

But the spirit of revolt which, in that case may be patriotism 
becomes ridiculous, and open to the charge of insincerity, when 
the tenets of its doctrine are transplanted and cultivated upon 
American soil by our foreign population. 

With further reason, also, must we question the sincerity of 
the Socialist, who, leaving oppression behind, emigrates to this 
country, where tyranny and despotism are unknown, and, yet, 
who continues to echo that war cry of destruction, wrung from 
his heart by the cruelty of his old-time oppressors. 

He comes here from a land of want and thraldom, to a land 
of plenty and freedom. He may come without name, fame or 
property, and he is received with open arms. After a brief res- 
idence, he is entitled to full citizenship and is then a part of 
the government; enjoying all the rights and privileges of the 
native born. Besides the active or public equality — the equal- 
ity possessed by all, the right to share in the government, such 
as the electoral franchise and eligibility to public office, — he has 
the rights of private equality. He is possessed of legal equal- 
ity — the equal possession of private civil rights, enjoyed by all 
citizens. Then there is the equality of material conditions — 
that is, the right to acquire wealth and all that wealth implies. 

Every opportunity to achieve success and happiness abounds 



SOCIALISM 279 

on every hand, and every incentive to industry and accomplish- 
ment awaits him, and, if he is energetic and skilful, there is 
nothing to hinder him from becoming prosperous, or, in other 
words, successful in whatever vocation in life he may pursue. 
With qualities that commend themselves to his fellow men, there 
is no limit to the possibilities of his achievements, and very soon 
(as has been very often the case) he may become a leader of 
men. If, therefore, he is sincere, surely he must agree with me 
that, in view of these conditions, this is no place for the Socialist. 
And does it not sound like a paradox to hear this cry of So- 
cialism still rending the air — while every avenue of fortune lies 
open to everyone? 

Socialism is self -contradictory and opposed to deep rooted and 
ineradicable human instincts. Its origin is, of course, purely 
selfish; but there are two kinds of selfishness — the enlightened 
and unenlightened. Unfortunately, Socialism belongs chiefly 
to the latter. It is often overlooked that the identical love of 
gain which seeks to equalize the distribution of wealth will not 
be satisfied with equality. A desire for gain will still remain 
and seek to acquire. The most commendable object in Socialism 
is the uplifting of the down-trodden and poor. Yet, William 
Jennings Bryan tells us that under Individualism we have seen 
a constant increase in altruism. The fact that the individ- 
ual can select the object of his benevolence and devote his means 
to the causes that appeal to him has given an additional stimulus 
to his endeavors. And Mr. Bryan pointedly asks the question: 
" Would this stimulus be as great under Socialism? " Let it not 
be forgotten that by means of present tendencies and existing 
economic laws the poor are constantly growing richer. They 
were never so prosperous as to-day. Labor has made great 
strides, and the uplift in the lower walks of life in all Christen- 
dom during the past twenty years has been beyond precedent. 
Give us wise and just legislation and complaints about the in- 
equitable distribution of wealth will quickly disappear. 

The state of society that the Socialists seek to establish may be 
beneficial to a class, which, under any conditions, lacks frugality, 
thrift and self-reliance; but just where the general mass of hu- 



280 SOCIALISM 

manity is to be bettered or elevated, socially, morally or politi- 
cally, is a point not satisfactorily explained. A society in which 
all human beings do right for the simple reason that it is 
right, cannot exist, unless human nature is recast and recon- 
structed. Human nature must be treated as it is found in the 
general makeup of man, and, therefore, a society in which all 
special desires, all ambition and all self-esteem have been elimi- 
nated, precludes development and progress. It reduces every- 
thing to utter shiftlessness and stagnation. In such a society 
there can be no incentive to great achievements in art, literature, 
mechanics and invention. If all are to be placed on an equal 
footing, the ignorant with the educated, the dullard with the 
genius, and the profligate with the provident, what encourage- 
ment is there for special effort? 

If you render accessible to each and every member of the 
human family the achievements and benefits of civilization, hold- 
ing " property in common," why should a man rack his brain or 
strain his muscles in producing something which he expects to 
prove remunerative to himself in some way, but which, under the 
Socialistic state, would go to the equal financial benefit of all ? 

Just for a moment stop to think of the effect of bringing all 
men as near to a dead level as possible, for I recognize that not 
even Socialism would secure the equality which it seeks. If one 
physician is more skilful than another, who could insist that he 
receive no better reward than the less skilful, when many would 
be willing to offer it? Or how else could he avoid having all 
the patients in the community upon his hands except by charging 
more for his services than an inferior physician ? If one lawyer 
shows greater ability than another, is he not entitled to a larger 
fee for his talent? And how else is he to protect himself from 
taking all the business from the lawyer of less ability ? Again, 
if the skill of the cabinet maker is higher and rarer and worth 
more than that of the carpenter, how can the latter expect the 
same compensation as the former? To put both on the same 
plane would be unj ust and would lead to one being compelled to 
work beyond his strength, while the less skilful would probably 



SOCIALISM 281 

be insufficiently occupied. Socialism, you thus see, would often 
place a premium upon laziness and inefficiency. 

Socialism would benefit the shiftless and lazy at the expense 
of the thrifty and industrious. Is that a good system to advo- 
cate and follow? Which of you would be willing to share your 
hard-won provision for your own family with another family, 
the head of which you knew to be lazy, incapable and dissipated ? 
What incentive to struggle would remain if the results of that 
struggle were to be taken away from you and given to others 
who sat idly by? What would be the effect upon the United 
States of throttling the ambition to achieve? Take the neces- 
sity of struggle out of life, and we should quickly weaken human 
nature. Civilization would decline and national decay quickly 
follow. True, the competitive system works harshly upon the 
weak and incompetent. This, however, opens a channel for the 
development of benevolence, kindness and patience, without 
which human nature would be exceedingly one-sided and for- 
bidding. The indigent, unfortunate and weak will always be a 
charge upon the stronger, whether in the family, the munici- 
pality or the State. It is folly to think that life can be lived 
without struggle; and that is one of the chief delusions of So- 
cialism which would quickly impair our national manhood and 
endurance. Trouble and pain have their part in the plan of 
nature. 

The Socialist is usually an unfortunate or misled individual. 
He has probably suffered from reverses or unfortunate environ- 
ment. He has perhaps been roughly or cruelly handled. Per- 
haps he cannot get on satisfactorily, or his ambitions have been 
disappointed. He is then in a condition of discontent ready to 
swallow Socialistic — or any other — sophistries which hold out 
the delusive promise of relief. 

Socialism attaches too little importance to the fact that men 
are made with an infinite variety of tastes, abilities and capac- 
ities. No two are precisely alike, and it is utter folly for poor, 
weak man to undertake to equalize these differences. All prog- 
ress in history has been made through struggle and sacrifice; 



282 SOCIALISM 

and Socialism, no matter how beneficent its intentions, cannot 
change the inscrutable laws of nature or humanity. All natural 
laws have their reverse side. Gravitation, which keeps us firm 
on our feet so long as we are on solid ground, knocks us to 
pieces if we attempt to walk off a housetop or over the opening 
of a pit. It is not the natural law, but the attempt to ignore 
it, that gives us trouble. 

I most emphatically assert that we cannot get rid of competi- 
tion any more than we can get rid of the law of gravitation. 

The American inventor, mechanic, farmer, merchant and finan- 
cier, and the worker in every profession, are, every one of them 
— proud, respectively, of their skill, knowledge and ability. 
Their ambition is to excel — to produce the most and best. Ex- 
perience, enterprise and courage create opportune conditions 
most favorable to the State and Nation and to themselves. Each 
vies with his fellow man in producing the best results and is 
always willing to tackle any obstacle — no matter how formida- 
ble — that stands in the way of success. In his whole compen- 
dium and entire makeup, there is no such word as fail. He aids, 
by his untiring and individual energy and effort, in making his 
country the greatest in the whole agricultural, industrial and 
financial world. He reaps the reward of industry and accom- 
plishment and his home is blessed with bounty; and he knows 
that his children have equal opportunity with himself to learn 
and to achieve. 

Shall he be asked to tolerate, or consider the sacrifice of all 
these things, so dear to him, for Socialism? 

Shall he be led to believe in a foreign plan or system of gov- 
ernment that degrades skill, eliminates acquisition and thrift, 
and ignores genius ? I cannot think so ! 

These are the very qualities and attributes that he prizes so 
highly, as essential to the prosperity of the home and nation. 
He knows (or should know) that to do so would be to deaden 
and relinquish those God-given qualities of heart and brain that 
have helped to make him and his country what they are to-day. 

He knows (what the nations of the world concede) that the 
American people are the most prosperous of all on the face of 



SOCIALISM 283 

the globe, — and that this high and commanding position has 
been attained under existing conditions, and through the opera- 
tion of our admirable system of government. 

Whatever, therefore, may be the pretexts used to make him 
dissatisfied with his lot, his own experience tells him every day 
that the Constitution under which he lives is a glorious one; and 
so implanted in the hearts of the American people as to be im- 
pregnable against the assaults of Socialism. 

At the same time, he is appreciative of the fact that it is not 
in the nature of things to expect in this world blessings pure 
and unmixed, but he is thankful for the superior good that he 
enjoys under our beneficent democratic form of government. 

A state of Socialism in the United States would tend to drive 
all our men of superior ability, skill and power out of the coun-^ 
try. The strong would quickly seek other fields where the quali- 
ties they possess would have a free chance and an open field. 
They would promptly desert a country that offered nothing bet- 
ter than a dismal dead level, with no means of achievement in 
sight, and the nation would quickly fall into a state of miserable 
inertia or decay. Our forefathers came to this country to es- 
tablish religious freedom; they next fought for political free- 
dom ; afterwards they sacrificed a million lives for race freedom, 
and now we, their successors, with such glorious traditions behind 
us, must stand for industrial and social freedom. For, in the 
final analysis, Socialism can stop at nothing short of industrial 
slavery and political bondage. Great achievements would be im- 
possible under it. 

Having shown the force and importance of individual initia- 
tive and independence and the necessity for the spur of competi- 
tion to bring about the best results in human welfare and 
achievement, I now turn to the rather concrete branch of the 
subject, known as Municipal Ownership. 

Naturally, a proposition involving the placing of the owner- 
ship and operation of our railroads, telegraph lines, plants for 
supplying light and surface transportation, and conducting man- 
ufactories and business, is one of such vital concern to all of us, 
as to arouse our keenest interest. 



284 SOCIALISM 

It is a part and parcel of the Socialistic plan of government, 
and, to a very great extent, the arguments and illustrations pre- 
sented in my treatment of Socialism, generally, are of direct ap- 
plication to Municipal Ownership. 

I would term it the entering wedge of Socialism, adroitly re- 
sorted to by its advocates. These Socialists well know the tem- 
per of the American people toward their propaganda and wild 
project, and at the same time they recognize the peculiar trait 
of character disclosed by Americans in their curiosity and liking 
for anything new. Hence, they grossly exaggerate the short- 
comings and ills that exist in our body politic as constituted; 
and, at the same time, extol, in an extravagant manner, the su- 
perior conditions that would follow the taking of a small portion 
of the Socialist's infallible cure. 

Municipal Ownership, as far as I have been able to observe, 
is also a pure and simple political move to secure votes for as- 
pirants for office, and it is used for this purpose, regardless of 
any other question. It is one of those planks that we often see 
inserted by parties in their platform, to stand upon, to attract 
and gather in the votes. So Socialism has its uses — for 
them. 

I will admit that there are many economists who have pre- 
sented a friendly side to the Socialistic theories involved; and 
have prepared able and extended articles in their endeavor to 
support or uphold such theories (either in whole or in part) ; 
and it would be unj ust to include them in the same category with 
politicians and Socialists. However, if that statesman was only 
half right, who, in speaking of the tariff, said that the question 
was a business one, and that a condition and not a theory con- 
fronted us, then I feel that I am right in saying, that " Public 
Ownership " is a practical business question entirely, — and not 
a theoretical one. 

There are so many logical and unanswerable reasons against 
this Socialistic proposition, that I feel it incumbent upon me to 
enlarge only upon the practical ones, that I know more about, 
than upon the theoretical group. 

The experience of years has demonstrated that at the present 



SOCIALISM 285 

time all business enterprises require rare ability and experience, 
if not genius, to ensure success. 

Great financiers and successful men have devoted their lives 
to the study and practice of their trade and business. 

How is it possible, then, for municipalities to expect such 
qualifications from officers, whose term of office is for one or two 
years, or during the tenure in office of a political party. 

In the economy of commerce and its daily conduct and oper- 
ation, there are numerous divisions or departments, each one of 
which can only be understood, appreciated and conducted by men 
of special training and fitness — who have given years of appli- 
cation thereto — and it is only by their watchful care and expert 
management of each of these divisions that a possible success is 
derived or business made to pay. 

The smallest neglect, the merest indifference to details, or the 
inattention that always accompanies abstraction by something 
else — taking one's mind off his business — upsets the whole 
system, and means waste instead of economy, loss in place 
of profit, and inevitable failure as the result. That this is true 
there is not the slightest doubt, and would be readily confirmed 
by the leaders of every industry. 

Animated by a desire to make the best possible showing, for 
use at the next election, a false economy would be exercised un- 
der Municipal Ownership, and no attention would be paid to ob- 
taining useful new inventions ; and needed improvements would, 
likewise, be ignored. 

On the other hand, under private ownership, the best pro- 
fessional talent is employed, at salaries unheard of in public of- 
fice; and all the latest inventions and improvements are at once 
utilized, giving the public up-to-date service. 

The active, modern business man, keenly alive to the require- 
ments necessary to ensure profit and success, perceives, at a 
glance, the evils and mischievous results that would infect every- 
thing carried on under this Socialistic plan. And as John Stuart 
Mill well says: " The mischief begins when, instead of calling 
forth the activity of individuals, the municipality substitutes its 
own activity for theirs." 



286 SOCIALISM 

No serious attempt has ever been made to show the possibility 
of securing and retaining, under some rule of municipal civil ser- 
vice, or otherwise, the best men to assume the burden of manage- 
ment and responsibility. As already explained, it would be 
practically impossible to secure the best men; and no system 
of civil service has yet been formulated, intended and able to 
provide for their retention. 

In this connection, a fitting illustration is the case of Col. 
Waring, who instituted and maintained the best street cleaning 
system we have ever seen. His work was simply marvelous, and 
he made New York City a model of cleanliness. 

No one ever questioned his ability or integrity; yet, while at 
the very zenith of his success, he was asked to resign, and 
obliged to leave the city employment to make room for the choice 
of a new city administration. 

The defects and fallacies of Municipal Ownership which I 
have described permeate all government ownership. Official re^ 
ports and statistics furnish convincing proofs and conclusive 
evidence of the failure of this system as conducted abroad, and 
more signal loss and damage — in an incalculable degree — 
would surely follow its adoption here. Just in proportion as 
our interests and enterprises are the greatest and most suc- 
cessful, as compared with other nations, would be the immensity 
of our depreciation and collapse. 

The United States is so different from other nations in its 
political system that this fact alone precludes serious considera- 
tion of our adoption of this imported Socialistic hobby and po- 
litical heresy. It is, also, a country, whose every chapter of 
growth, progress and prosperity is a continuous narrative of 
individual effort of its citizens. They, naturally, prize individ- 
uality as they do independence itself; and have every reason to 
believe that the present system of government is the best for 
them; and that this land of Individualism is no place for So- 
cialism. 

Imagine New York under Municipal Ownership of our pub- 
lic utilities ! We should then have fastened upon us a more 
colossal and more corrupt Tammany than even existed in 



SOCIALISM 287 

Tweed's times. Graft would thrive immeasurably. Let us take 
a lesson from England in this respect, where public ownership 
has been tried on a larger scale and under more favorable con- 
ditions than elsewhere. In a few instances the running of street 
railways or city lighting plants has been successful, but excep- 
tions do not always prove the rule, and the conditions under 
which these enterprises have been operated there must be taken 
into consideration. English cities are comparatively free of po- 
litical corruption; and are, moreover, often served by men of 
high character, wealth and ability, — men having a strong sense 
of civic duty, who deem it an honor to give their community ef- 
ficient service. Unfortunately, we have not yet developed a 
class of this sort in the United States; perhaps in due time we 
shall; but, until then, the experiment of Municipal Ownership 
had better be indefinitely postponed. A weak point of Munici- 
pal Ownership has usually been the financial end of the business 
concerning which the public has been poorly informed. Many 
of these enterprises in English cities have proved unprofitable. 
The accounts have been juggled, and expenses that should be 
charged against the plant were often transferred to city ac- 
counts. Not a few of the English cities have so run into debt 
as to injure their credit and impair the sale of their securities. 
Already, the British taxpayer is beginning to complain about 
the costliness of these Municipal Ownership schemes, and a de- 
cided reaction against them is setting in. The London County 
Council has launched heavily into these ventures, many of which 
have proved losing ventures, and some prominent experts have 
gone so far as to predict that London will be bankrupt before 
long unless present tendencies are reversed. If Municipal Own- 
ership has failed under the highly favorable conditions which 
exist in England, how can it succeed here? Again, the English 
telegraph system operated by the British Government does not 
compare with the private systems of the United States, either in 
efficiency or cheapness, and England with its public telephones 
is very far behind the United States in efficiency and cost. Lon- 
don does not begin to have the number of telephones per capita 
that New York can claim. American railroads under private 



2S8 SOCIALISM 

ownership perform the best and cheapest service in the world. 

If any further argument were needed to convince you that 
the United States is no place for Socialism, its root or branches, 
it may be found in the radical and quite amusing change of 
front shown by Major Dalrymple, of Glasgow, upon the oc- 
casion of his visit to this country. He came here at the request 
of Mayor Dunne, of Chicago, and the Municipal Ownership 
League of New York, to aid the forces of Socialism in their ef- 
forts in behalf of Municipal Ownership. He was the great 
Apostle of that doctrine in Glasgow, and the very man, in their 
opinion, to convert our people to that system. 

Upon his arrival here, he was greeted with great eclat by the 
League of this city and gave out an interview in which he 
spoke as follows: 

" I see no reason why any city in this country should not be 
able to own its street railways, and to run them with as much 
success as we have achieved at Glasgow. I admit that the 
proposition is a much larger one than the one we had to tackle, 
but at the bottom it is the same." 

This was before he knew our country and its institutions. 
After an extended stay here, he prepared for his homeward 
journey, but before sailing, he was again interviewed, and to 
the surprise and discomfiture of the Socialists, he retracted all 
that he had said before in favor of Municipal Ownership, in the 
following language: 

" To put street railwaj's, gasworks, telephone companies, etc., 
under Municipal Ownership would be to create a political ma- 
chine in every large city that would be simply impregnable. 
These political machines are already strong enough, with their 
control of policemen, firemen and other office holders. 

" If, in addition to this, they could control the thousands of 
men employed in the great public utility corporations, the polit- 
ical machines would have a power that could not be overthrown. 
I came to this country a believer in public ownership. What I 
have seen here, and I have studied the situation carefully, makes 
me realize that private ownership, under proper conditions, is 
far better for the citizens of American cities." 



SOCIALISM 289 

The New York papers aptly called this, " The conversion of 
the Scot " ; and this blunt and honest admission coming from 
their own authority, that Municipal Ownership in this country 
was wholly impracticable, stunned and paralyzed its agitators, 
and caused many of its adherents to leave the ranks of Social- 
ism. 

Mr. James Bryce, the worthy English Ambassador to this 
country, pointed out some twenty years ago, in his " American 
Commonwealth " how the then future of the United States 
sometimes presented itself to the mind as a struggle between two 
forces, — the one beneficent, the other malign ; the one striving 
to speed the nation to a port of safety before the storm arrives ; 
the other to retard its progress, so that the tempest may be 
upon it before the port is reached. He, further, expressed con- 
cern as to whether the progress then discernible toward a wiser 
public opinion and a higher standard of public life would suc- 
ceed in bringing the mass of the people up to a high level, or 
whether the masses would yield to the temptation to abuse their 
power and seek violent and vain and useless remedies — like 
Socialism — for the evils which would affect us. 

This able statesman predicted that the question would be 
decided early in the present century, and would be evidenced 
by the condition of progress and prosperity brought about by 
the people in the meantime. 

When the Ambassador was recently welcomed to our shores, 
the answer to this question concerning us, asked by him so 
long ago, was found awaiting him. 

It was spoken clearly and loudly by our teeming products 
of agriculture and mining, and echoed in thunder tones by our 
mammoth shops and factories of industry, and it was seen shin- 
ing in the happy faces of our busy and prosperous people. 

Upon the golden page of to-day in our splendid history will 
stand out the assuring fact that this surpassingly successful 
state of things has not blossomed and come forth under the 
blighting shade of the deadly upas tree of Socialism; but that 
it has all been developed by and through Individualism. 

In conclusion, let me impress upon you that Individualism in 



290 SOCIALISM 

the United States has stood all tests — especially the crucial 
tests of time and experience — and it points with pride and 
satisfaction to the great developments secured for the American 
people under the bright and beneficent rays of our admirable 
Constitution and Republican form of government. 

And if the aim of all government is to ensure prosperity to 
the country, and happiness to the people it controls, the un- 
rivalled excellence of Individualism may fairly be judged by 
its magnificent results. 



NATIONAL IDEALS 

Address delivered before The National Civic Alliance Congress, at 
Carnegie Hall, New York, December 10, 1909. 

I AM glad to have the opportunity of addressing the Amer- 
ican Civic Alliance in the presence of its National Com- 
mittee and Civic Congress, for it commends itself to all 
patriotic Americans by aiming to correct as far as possible 
existing social and political evils, and earnestly exerting its 
force and influence in favor of good city government and na- 
tional progress. 

It is indeed designed to be an uplifting local and national 
force; and in its National Committee of one hundred, we see 
distinguished men resident in and representative of all sections 
of the country and all political parties, whose power and per- 
sonal influence for good, if properly applied, can hardly be 
overrated. It is the place and purpose of this Alliance and 
its National Committee, to initiate, to suggest, to guide and 
to direct the reforms best calculated to promote betterment in 
municipal, State and National government and incidentally its 
influence will be felt in all departments of industry and social 
life. 

The field is vast, and the work before us herculean, but 
example is contagious, and our example cannot fail to be ad- 
vantageous in spreading the gospel of political and social 
righteousness apart from the actual work that we do ourselves. 
The more we do, therefore, the stronger will be our example, 
and the more followers we shall have. 

Everything we do will, or should, have an educational value, 
and tend to promote not only good government, but right living, 
general improvement in business methods and morals, and gen- 
eral prosperity. 

291 



292 NATIONAL IDEALS 

Practically all human interests and activities are interlaced 
and within reach of the influence of this Alliance, and there- 
fore the matters and subjects within its province are multitudi- 
nous, and it should endeavor to make the best of its opportuni- 
ties. 

There are many questions of policy and statesmanship that 
should receive its attention, with nothing too great or too small 
for its consideration. It should constitute itself a modern St. 
George ready to slay with its battle-axe the Dragon of Evil 
wherever and whenever encountered in or out of politics. 

Abuses of official power and abuse of our natural resources 
are equally within its scope, and the representatives of other 
civic and educational organizations gathered at this non-partisan 
National Civic Congress, with delegates from thirty-four States, 
are by their very presence already doing good work for the 
cause, and giving it a broad and comprehensive national char- 
acter. 

While this Congress is called to consider and devise the best 
means by which our numerous Civic activities, not only here, 
but from ocean to ocean, may be co-ordinated, as well as to 
devise more effective methods than now exist for the study and 
solution of our political problems, there is no limit to its juris- 
diction, as the lawyers say, and in the multitude of counsellors 
there is wisdom. We have this on the best authority — that 
of Holy Writ. 

We have, therefore, reason to feel encouraged that much 
will be initiated, and in the end accomplished, by this Alliance, 
through the public spirit and energy of its members, and es- 
pecially those taking part in the Congress, including those in 
active sympathy with it who have been unable to attend. 

That there is urgent need of an active organization of this 
kind is apparent to all familiar with the methods, abuses and 
statistics of our City Government; and that there is a public 
demand for the work of such an organization as this is equally 
indisputable. So we have the bulwark of public sentiment, — 
of the best public opinion, — at our back. This gives us strong 
moral support, which should not be undervalued. 



NATIONAL IDEALS 293 

The proposed new charter for the City of New York, on 
which the Charter Committee of the Legislature has been giv- 
ing public hearings, is a very important measure, concerning 
which this Alliance should have something to say, inasmuch 
as it provides for government by commission to an extent hith- 
erto untried. This feature is opposed by many on the ground 
that it is undemocratic and antagonistic to Republican institu- 
tions, as it takes government directly out of the hands of the 
people as far as it is possible to do so. 

Government by commissions is exposed to abuses as is every 
form of government, and the good or evil in them depends 
upon their composition — upon the men selected for them. 
But with honest public spirited men composing these com- 
missions, the government of this city ought to be, and prob- 
ably would be, much better, much more efficient and very much 
more economical under the operation of the government by com- 
mission system, than it is now. It would give us concentra- 
tion of power, it is true, but in the right hands it would act 
promptly, efficiently and in the right direction, with a minimum 
of red tape. It would thus save the city both time and money 
in carrying out its legitimate purposes, and operating its every- 
day machinery. 

It might tend to bring about a change along similar lines, 
in the State Constitution, and give us a legislature with fewer 
members, but that would be likely to do good by facilitating, 
and therefore expediting, legislation, and eliminating some 
of our large surplus of professional politicians. It would 
have the merit, too, of saving expenses in salaries and other 
ways, and, as with the city commissions, would simplify gov- 
ernment. 

The system of direct primary nominations, which is agitat- 
ing political circles, should, in like manner, be inquired into 
and discussed by this Alliance, with a view to influencing leg- 
islation in its favor, if it is found on investigation to promise 
good results. Some of our foremost statesmen say and believe 
that the election of legislative candidates by direct primaries 
would be a material improvement upon the old system, and 



£94 NATIONAL IDEALS 

would greatly increase the sense of immediate responsibility to 
their constituents on the part of members of the State Legis- 
lature. A direct primary law is already in successful operation 
in several States, although in one of these, New Jersey, strong 
political efforts are being made to repeal it. 

The City of Boston about a month ago held an election at 
which it voted upon the referendum provision in the new char- 
ter which the last Massachusetts Legislature gave it. By this 
it was left to the Boston voters to decide whether they should 
nominate their candidates for all city offices under the conven- 
tion system, known as " Plan 1," or by nomination papers 
signed by at least five thousand registered voters, known as 
" Plan 2." The latter proved very popular. 

After the signatures for a candidate have been attested by 
the Election Commissioners, his name is put on the official bal- 
lot to be voted, but without any political designation whatever. 
The purpose of this is to obliterate party lines in voting in 
Boston elections; and it seems evident that this is a salutary 
reform, which would conduce to political purity and honest 
elections, not in Boston alone but in all other cities. 

The wastefulness of our own City Government and its enor- 
mous debt, and enormous annual expenses, are obviously 
largely due to the well-known desire of politicians on the side 
of the party in power to get as many of their friends as possi- 
ble on the payrolls, and at salaries as large as possible, and also 
to the well-known desire of those on the pay rolls to give as 
little of their time and work to the city as possible in return for 
their pay. 

There are, consequently, it is estimated by good authority, 
more than twice as many men in the city's employ as are really 
necessary for the proper performance of the work they do. 
Comptroller Metz has publicly stated that in the Finance De- 
partment more than a third of the men employed are entirely 
superfluous, and the work of the office could be better done 
without them. Look at the waste of money here involved in 
salaries ! 

But even greater waste is shown in the making of contracts 



NATIONAL IDEALS 295 

for work and supplies of all kinds at exorbitant prices, due to 
official favoritism originating in and dependent on graft, and 
the same remark applies to the extravagant cost of land and 
buildings for the city's uses, and to all condemnation proceed- 
ings for street openings and the like. 

This extravagance should be curbed in the interest of the 
people, and it is high time that we began a crusade against it. 
The American people are great and prosperous and the most ex- 
travagant in the world, but it is always well to bear in mind 
that economy is wealth. 

This trait of extravagance is mainly owing to the great abun- 
dance of our natural resources, and the wealth they have dif- 
fused among the people, but this very abundance of our re- 
sources has stimulated us to draw upon them too largely, and 
even recklessly, regardless of the future. In this way our great 
primeval forests have been very largely cut down all over the 
country, and used for building purposes, without provision be- 
ing made, until recently, for planting a new growth of timber. 
But now the Government is making up for lost time in this 
respect. 

Farm lands, too, east, west and south, have been planted 
with a long succession of crops without being fertilized. Hence 
their partial exhaustion, and diminished productiveness, and 
the resulting deserted farms of New England, and the annual 
exodus of grain growing farmers from our Western States 
to the virgin lands of Canada. 

It is therefore not surprising that the supply of food products 
in this country has failed to keep pace with the increase of 
population, and is now little or no more than equal to our 
own consumption. This is reflected in the loss of the very 
large balance of trade that always stood in our favor until re- 
cent years, but which has gradually grown smaller, and indeed 
almost vanished, under decreased exports and increased im- 
ports. 

One of the most important questions that confront the 
American people is how can we induce the immigrants who 
come to the United States not to stay in cities, but to settle in 



296 NATIONAL IDEALS 

the farming districts or in country towns. It seems almost 
impossible to stamp the true American spirit in the mind of a 
foreigner who is crowded into one of the already overcrowded 
districts of a city like New York. Down in New England are 
thousands of acres of farm lands not under cultivation, and 
the same conditions prevail in the States in the middle West. 
If colonies could be formed in some of these country districts 
they would provide suitable havens for many of these foreigners, 
and the products of their labor would meet with a ready sale 
in nearby cities. The present high prices for our table food 
should be an incentive to any man with a fair knowledge of 
truck-raising to be, not only a tiller of the soil but a benefactor 
as well, to his fellow men. An organization to help along a 
project having in view the use of neglected garden spots 
would do much to benefit our city and our country. 

But I am not here to do more, in the short time at my dis- 
posal, than make suggestions as to the work before us; and, 
in dealing with civic affairs, we must take into consideration 
national affairs, for the cities are dependent upon the rest of 
the country, just as the rest of the country is tributary to the 
cities. 

The prosperity of the City of New York depends chiefly 
upon its being a great seaport, with its shipping interests, its 
commerce, its imports and exports, and its huge passenger 
traffic. These have made it the great banking centre of the 
country. If these declined, the city's wealth and greatness, as 
the nation's monetary and commercial capital, would decline in 
proportion, and as the whole nation is tributary to New York 
commercially and financially, New York is, in turn, dependent 
upon the country's productiveness and general prosperity. 

So while laboring to promote the interests of the city, we 
must not confine our thoughts and efforts merely to improve- 
ment in civic affairs, but also constantly keep in view national 
affairs, and co-operate with all other public spirited workers 
throughout the country, for the national welfare. 

To this end our influence in international as well as home 
matters should always be exerted in favor of peace with honor, 



NATIONAL IDEALS 297 

for, as General Sherman truly said, " War is hell." Then 
look at its terrible cost in money, to say nothing of life and 
property! "Peace on earth and good will to men" is a good 
scriptural motto to hang on our walls. 

As matters stand in New York at present, what the situation 
most imperatively demands is a close watch upon all the city 
departments. To provide and maintain this we need more 
and more active and all-seeing bureaus of municipal research 
and more city clubs and kindred organizations that will investi- 
gate and bring to the light of publicity all wrongdoing and 
unlawful acts on the part of city officials, or employees, that 
can be discovered. We need that eternal vigilance that is the 
price of liberty. 

By constant watchfulness in this way abuses of official power 
and dishonest methods, and much of the present waste, can be 
checked in the City Government. Private citizens should, at 
the same time, cultivate more public spirit in civic affairs than 
they have generally shown hitherto; and each one should feel 
it to be his duty to protect and promote, in so far as in his 
power lies, the interests of the city he lives in. He would 
thus actually as well as theoretically be a good citizen. But 
apparently there are, — outside of the present company, — few 
clamoring to earn the title in that way, just now! 

Our own public spirited example will however no doubt bear 
good fruit by encouraging public spirit in others, and spread- 
ing the gospel of good government, not only throughout the city 
— the Greater New York — but, by degrees, throughout the 
Nation. Our mission is clear. Let us now work for results, 
and in proportion to our success, we will prove ourselves pub- 
lic benefactors — benefactors of both the City and the Nation. 

There was a time in the history of the world when a man 
considered it a high privilege to say " I am a Roman citizen." 
This indicated that he was a citizen of the greatest country 
in the known world. At that time our own land was a wilder- 
ness, unknown and untrodden by any but savage tribes. 

To-day, to be a citizen of New York, is an honor equal to 
that claimed in ancient Rome in prestige and power. 



298 NATIONAL IDEALS 

The United States is the haven for the oppressed, and is 
soon to become the arbitrator of the world. We hear a great 
deal of the wickedness of our legislators ; and organizations, 
like our Civic Alliance, have been formed to check extrava- 
gance and curb misuse of power. 

The American people we're asleep until Roosevelt sounded the 
trumpet which awakened them. Some people designated Mr. 
Roosevelt as a crank. Maybe he was. Lincoln was called a 
crank fifty years ago. Maybe he was, but to-day he occupies 
the highest seat in the temple of fame. 

In all great crises the times produce the man. Roosevelt 
planted the seed. His plough dug too deep, it may be; but 
the seed is growing, and the flower of civic righteousness is 
blooming. It is for us to help keep our fellow citizens awake, 
and to induce the indolent to pay more attention to their civic 
duties. We want this country to be worthy of the toast of 
Ben Franklin, proposed in the height of his great career. At 
a banquet, the English Minister offered the following: 
" Here's to England, the sun which lights the universe." The 
French Minister followed with, " Here's to France, the moon 
which reflects the light of the Sun." Franklin arose and 
calmly said, " Here's to America, the Joshua who commanded 
the sun and the moon to stand still, and they obeyed him." 

Now we want our countrymen so to live that we may be 
worthy to command the other countries to stand for right and 
justice, and to have them obey. We do not desire to enforce 
our command by war, but by such an example of right living 
and good government that our advice will be more powerful 
than a command. 



REASONS AGAINST A CENTRAL NATIONAL BANK 
AND POSTAL SAVINGS BANKS 

ADDRESS DELIVERED TO THE MEMBERS OF THE AMERICAN INSTI- 
TUTE OF BANKING, IN LORIMER HALL, TREMONT TEMPLE, BOS- 
TON, MASS., WEDNESDAY EVENING, JANUARY 19, 1910. 

Mr. Chairman, Officers of Banks and Trust Companies of 
Boston, and Members of the American Institute of Banking of 
Boston, 

I FEEL greatly gratified by the compliment you have paid 
me by your presence here this evening, and value it 
all the more highly because of the eminence of so many 
of you in the banking and business world, and particularly the 
banking and business world of Boston. 

I am indeed proud of the honor of addressing you; and you 
— the bankers and business men of Boston — have reason to 
feel proud of your good old City, which is famous not only as 
the Hub of the Universe but as the foremost seat of learning 
and literary culture in America. 

Its fame, however, as the scene of the Boston Tea Party is 
of much more ancient date, and that event, thus early in its 
history, glorified Boston. That Tea Party was of such prime, 
not to say tremendous, importance that it profoundly stirred 
to revolution all the Thirteen Colonies. Boston led the way. 
It also aroused and greatly excited the British Government. 
" Boston " was on every lip. It particularly provoked the 
fierce indignation of King George the Third, who vowed ven- 
geance on Boston, with what result we all know. 

That Boston Tea Party was the prelude to the American 
War of Independence. It opened a new era in the world's 
history when the Thirteen Colonies rose, as one, to throw off 
299 



300 NO CENTRAL BANK NEEDED 

allegiance to the British Empire. The knell of British do- 
minion was sounded at the Battle of Bunker Hill, for it set 
the ball of Revolution rolling until it reached the victory at 
Yorktown, and was made glorious by the Declaration of In- 
dependence. This was well, and a blessing for both England 
and the Colonies, thanks very largely to Boston. 

But there is so much to be said of the other glories of 
Boston, where American Literature was enriched and advanced 
by Emerson, Prescott, Longfellow, Holmes, Whittier, Ticknor, 
and many more great New England lights that I could never 
do the subject justice. So I shall not attempt it, believing dis- 
cretion to be the better part of valor. It would be too much 
like painting the lily, or gilding refined gold. 

I cannot sufficiently thank you, Gentlemen of Boston, for 
the honor you have done me, and I am glad to be in such good 
company at the Hub of the Universe. 

Looking back upon our splendid history and National prog- 
ress since the Battle of Bunker Hill, we of the United States 
have all good reason to feel proud, not only of Boston but of 
our country, with its ninety millions of people, and its leading 
position among the nations of the world. 

Had England conquered in her war against the American 
colonies, civilization would have been put back a century both 
here and in England, whereas the actual result of the war 
brought property and progress to both, thanks again very 
largely to Boston. 

Those in this country who advocate the establishment of a 
Central National Bank almost invariably point to the Bank of 
England, the Bank of France, the Bank of Germany, and the 
other semi-official Government banks of other European coun- 
tries, as illustrations of their usefulness and National im- 
portance in regulating their respective money markets. 

But they ignore the fact that these banks deal with mon- 
etary laws, and political, social and other conditions very dif- 
ferent from our own and that their territorial environments 
are also vastly different. This inevitable difference is owing 
largely to the narrowness of their own banking systems and 



LESSONS OF THE PAST 301 

the smallness of their respective countries, in comparison with 
our immense stretch of country from ocean to ocean. 

Moreover these European banks are the growth of cen- 
turies, and each is adapted to the special needs of its nation. 
Each therefore possesses that confidence of the people which 
is also of slow growth. It is especially slow in old countries, 
but it is lasting; and in the case of these great banks it is 
not impaired by their known defects. 

Even the Bank of England is liable, under the law framed 
for its regulation by Sir Robert Peel, to be forced to suspend 
payment in time of panic, and it has several times escaped 
suspension only by the Government — namely the Cabinet — 
suspending the operation of the Bank Act. This suspension 
releases the Bank of England, for the time being, from its 
obligation to maintain the stipulated percentage of gold re- 
serve to its circulation, and permits it to issue any amount of 
its notes that it sees fit without any gold reserve. 

The immediate effect of this Government suspension of what 
is universally called the Bank Act is to restore confidence in 
the maintenance of the Bank of England's solvency, and to 
promote confidence in the monetary situation generally. 

This, in turn, reflects the popular confidence in the Bank of 
England itself, and the integrity of its management. The 
people feel absolutely sure, under such circumstances, that 
it will not abuse its power and privilege. Such public confi- 
dence could not be inspired in any other bank in the United 
Kingdom. 

No such bank as this could be created in the United States 
— at least not in this generation, nor is it required. The two 
attempts that were made to establish a central United States 
Bank were failures, and both banks were wound up inglo- 
riously, while their charters were repealed by Congress. 

The first United States Bank was from start to finish a hot- 
bed of political intrigue and favoritism. It became involved 
in numerous scandals, and its Government and other deposits 
were loaned freely to its friends — the friends of the Party 
in power — so that it had comparatively little for the rest of 



302 NO CENTRAL BANK NEEDED 

its customers. It, therefore, became discredited as a general 
bank of deposit. 

The second United States Bank, established in 1816, under 
the presidency of Nicholas Biddle, was somewhat better man- 
aged, and was perhaps less of a political machine than the 
first, but still it was the subject of much scandal, and its 
friends — always the friends of the Party in power — un- 
duly monopolized it and destroyed its usefulness as a bank for 
the people. Under the blighting influence of politics and 
favoritism, to use a common expression, its business fizzled out, 
and, proving unprofitable, it went into liquidation to save 
itself from insolvency. 

As with the first United States Bank, however, it paid its 
creditors in full. The political friends of each of these insti- 
tutions saw to this in the obsequies, and borrowers were forced, 
or when necessary, helped, to pay up, to avert fresh scandal. 

This experience of what was practically a Central National 
Bank should therefore deter us from making a third attempt 
to establish one, for the old objections would still apply to it, 
besides which it would have a somewhat dwarfing and blighting 
effect, directly and indirectly, upon all other banks, particu- 
larly the National banks. 

But the proposition to establish a Central National Bank in 
New York, with branches in the other reserve cities, to super- 
sede the existing Sub-Treasuries, is being very earnestly advo- 
cated by the Administration at Washington, and also by those 
bankers who expect to control it, or to have a voice in its man- 
agement, if it is established. 

This bank would be under the direct protection and virtual, 
or at least nominal, control of the Government — as it would 
have to be created by special Act of Congress — and it would 
act as the fiscal agent of the United States Treasury. 

The prime objection to it is that it and its branches would 
be a bad substitute for the Sub-Treasuries, and that, as a bank, 
it is not needed. It would, therefore, be an incubus, and a 
superfluity, in our monetary and banking system, and a haz- 
ardous experiment. In finance, the fewer experiments we 



JEALOUSY AND HOSTILITY CREATED 303 

venture upon the better; and we should always be sure that 
we are right before we go ahead. 

The banks — State and National — already established all 
over the country, to say nothing of private banking houses, sup- 
ply all the banking facilities the people require. That being 
the case, is it not wise to follow the old adage and let well 
enough alone? 

A more serious objection is that such a bank would in all 
probability become the master instead of the servant of the 
people, and at the same time overshadow, and perhaps dom- 
inate all other banks. 

With its thousand millions, or more, of deposits, and its 
hundred millions, or more, of capital, it would be a very pow- 
erful and dangerous factor in the money market, and, through 
its practical control of the Wall Street money market, it might 
largely control all the markets for stocks and speculative com- 
modities. 

It would, indeed, we may reasonably infer, absolutely dom- 
inate Wall Street, at least whenever it chose to exert its power; 
and in so doing it would dominate not only the markets for 
stocks and bonds, cotton and foreign exchange here, but for 
grain and provisions in the Chicago Board of Trade and else- 
where. In other words, its influence would be more far reach- 
ing, universal and despotic than anything in banking and prac- 
tical finance that the money power has yet developed in this 
country. 

How then could it escape becoming a great speculative and 
political machine, controlled by great speculative capitalists? 
It would be impossible. These men would presumably value 
and use it for their own purposes; and it would often be within 
its power to put stocks up or down by raising or lowering the 
rates for money sharply on stock collateral. It could suddenly 
call in an immense amount of stock exchange loans to force 
a fall in stocks; and later glut the market with money at low 
rates to help them to rise again. Manipulation to any extent 
in the stock market could meanwhile be employed to aid these 
purposes. 



304 NO CENTRAL BANK NEEDED 

All this would be a great national evil, and we should guard 
with infinite care against giving any institution possession of 
the power to accomplish it, for such power would of itself 
breed abuses of that power. Opportunity makes the thief. 

A Central National Bank would also be, in some degree, 
discouraging to all the other banks in the country, and es- 
pecially in the reserve cities, by subjecting them to a new form 
of competition, and to an all-pervading and dictatorial over- 
lordship in the shape of an institution invested with privileges 
and powers superior to their own. 

Bank officers generally would feel this to be detracting from 
their own official prestige as well as from that of their insti- 
tutions. It would tend to lessen both their own and their 
banks' importance, and create jealousy and hostility where 
there should be harmony. 

As it is, the National banks are all working together in peace 
and harmony and there is no clashing between these and the 
State banks, but a Central National Bank would be certain to 
prove a firebrand or a marplot. 

Men, particularly officers of prosperous banks in country 
towns, where they are looked up to as citizens of great im- 
portance, very much dislike to have any of the wind taken out 
of their sails, or to be taken down a peg in public esteem by 
having the importance of their own institutions lessened, even 
the least bit, and nothing should be done to hurt their pride, 
their ambition and their enterprise, or to provoke their ill will, 
or interfere with the prosperity of their banks by creating a 
superior power over them, so making them appear subordinate, 
whether actually so or not. 

We should guard against the creation of a Central National 
Bank, too, because of one thing in particular, and that is the 
stimulus it would give to the further concentration of the money 
power in the United States. Already that power has assumed 
enormous dimensions, and we have very recently seen fresh 
illustrations of its growth in the practical consolidation of 
several of New York's large Trust Companies. The Guaranty 



MONEY POWER ALREADY ENORMOUS 305 

Trust Co., the Bankers Trust Co., the Morton Trust Co., the 
Fifth Avenue Trust Co., the Mercantile Trust Co., and the 
Equitable Trust Co., not to mention others, have passed by 
purchase into the control of a single banking interest, which 
controls the Equitable Life Assurance Society, and is also 
closely affiliated with several of the largest so-called Wall 
Street banks. 

All this was accomplished so easily and so quietly that noth- 
ing was known about it, outside of the buyers and sellers, until 
it was publicly announced. So it can be readily imagined that 
this process of concentration and consolidation could be car- 
ried on indefinitely without any hindrance, or protest, because 
it is not in violation of any existing law. 

For Congress to pass a new law creating the proposed 
Central National Bank would be to directly stimulate this ten- 
dency of capital to combine with capital, and so add fuel to 
the fire that is destroying institutions of ordinary magnitude in 
order to build up one institution of hitherto unknown and 
colossal proportions. 

The unlimited extent to which this centralization and con- 
solidation might go, not only in banking but in all other cor- 
porations, may be inferred when we glance at the vastness of 
our industrial, transportation and franchise corporate inter- 
ests. There are in the United States 440 large, active and 
important Trusts covered by these descriptions, with a floating 
capital aggregating more than twenty thousand millions of 
dollars. 

So wide a field for the exploits of High Finance in welding 
corporations together, or at least bringing groups of them under 
a single management, was never seen before in this country or 
the world, notwithstanding the great trade and banking con- 
solidations that we have already witnessed. 

The power and resources of a Central National Bank would 
almost surely be used by the so-called Captains of Industry 
and speculative multi-millionaires, to bring about new and more 
gigantic combinations to add to their enormous wealth, and 



306 NO CENTRAL BANK NEEDED 

build up a Money Oligarchy that might become more powerful 
than the Government itself, and finally endanger if not over- 
turn our Republican institutions. 

Meanwhile, it would be, if not omnipotent in our politics, 
a constant and formidable menace to the rights, the liberty, 
and the welfare of the people. It would also be a drag upon 
National progress, in so far as it tended to crush or handicap 
corporations and individual traders of small capital by its 
fostering of practical monopolies; and despite our laws, specu- 
lative capital of great magnitude generally finds a way to 
carry out its own objects regardless of injury to others. 

The Government should, therefore, be careful not to give it 
any more power to perpetrate wrongs and abuses, or industrial 
oppression, than it has already, while placing no obstacle in 
the way of legitimate enterprise. 

Then, as a nation, we should guard against the individual 
power for evil of any one of these multi-millionaires, or a com- 
bination of them. 

The amassing of great wealth in a few hands, and its use 
and abuse, in this generation, presents a problem to the Amer- 
ican people which they have not yet satisfactorily solved; and, 
therefore, Congress should not only do nothing to make the 
Money Power more colossal than it is, but impose barriers of 
safety for the people where found necessary. It certainly 
would be paving the way to the real, or possible, abuse of cap- 
ital if it authorized a Central National Bank, with all its 
branches and Government ramifications and influences, capped 
by its tremendous and dominating money power. That would, 
indeed, be a great National evil. 

Can we hope now — after our two failures to establish a 
United States National Bank — to escape those conditions and 
influences which wrecked each of them, in our third attempt 
to establish one? 

Is there any good reason to suppose that this third experi- 
ment would be any more successful than the first or the second? 

The mere fact that such a bank would, from the start, be a 
target for the shafts of the envy, hatred and malice of the 



AN ENGINE OF SPECULATION 307 

other banks — National as well as State — would be against it. 
It would also be unpopular with the great mass of the people 
of small and moderate means, because they are all in favor of 
the diffusion of capital, whereas it would represent the con- 
centration of capital. They would be apt to regard it as the 
citadel of the capitalists, and as inimical to the common weal; 
and popular sentiment of this kind bodes ill for any institution 
in a Republic, apart from the other evils and dangers con- 
nected with its management that I have pointed out. 

There is, too, no reason to believe that the political agitation 
against it, both in and out of Congress, would be any less than 
it was against its predecessors in and after President Jack- 
son's time, but, on the contrary, more bitter and violent. 

It might be run for a few years, with great success to those 
in control, as a huge over-shadowing political and speculative 
machine; and it might become more famous as the citadel, the 
stronghold, of the capitalistic class, but as a bank to serve the 
interests of the people, the needs of the Nation at large, it 
would be found wanting, besides being a constant source of 
danger to our monetary system. 

There would be endless popular and political clamor, from 
time to time, to curb the monster we had created, or to annul 
its charter, and the ultimate result would more than probably 
be that its charter would be annulled. Thus history would re- 
peat itself, but no doubt with much more political and financial 
commotion and business disturbance and disaster than attended 
the liquidation of either of its forerunners in the first quarter 
of the last century. 

Whatever may be said in favor of a central bank from the 
theoretical standpoint, from the practical standpoint its estab- 
lishment in the United States is improbable, if not impossible. 
The Central Bank implies a very high degree of centralization 
of financial power — something concerning which the Ameri- 
can public is more sensitive about and more afraid of than any- 
thing else. If we ask ourselves what is the meaning of public 
hostility to railroads and to great corporations, we find it is 
simply a fear that the power of the few men who may control 



308 NO CENTRAL BANK NEEDED 

these great institutions would be too great to be safely entrusted 
in the hands of those engaged in selfish pursuits; and might 
easily become so powerful as to rival and actually threaten the 
stability of the Government itself. This apprehension is deeply 
wrought into the minds of the people and not, I regret to say, 
Avithout some reason. They fear, and justly so as history 
proves, that the influence of such a power in the Legislature 
might result in laws being made for the classes rather than for 
the masses. In many cases this instinct of self-preservation on 
the part of the public expresses itself in rude, ignorant and 
ill-advised legislation; but the instinct which provokes this 
opposition is true, and will remain, and must be reckoned with. 
There is no doubt the majority of the American people will be 
opposed to a Central Bank, in so far as it carries a further 
concentration of banking power. 

So much for the political difficulties to be overcome. An- 
other source of opposition will come from the stockholders of 
20,000 banks scattered all over the United States. Needless 
to say their influence will count for something. As for plant- 
ing the Central Bank system in the United States, while it is 
desirable to copy the best foreign examples when feasible, it 
must be remembered that conditions here are vastly different 
from those abroad; and a system that would work admirably 
in compact, well-organized regions such as England, France, 
Belgium and Germany, would not fit the widely scattered busi- 
ness centres of this country where the conditions of credit are 
fluctuating and vastly different from those abroad. If the 
Central Bank were established with its necessary branches, it 
could not eliminate the independent banks of this country, 
which in times of crisis could not be made to cooperate with 
the Central Bank, and might, therefore, defeat its protective 
efforts. All kinds of jealousies would arise interfering with 
the effective working of a Central Bank; not the least a deep- 
rooted prejudice against New York, which however unreason- 
able, must be taken into consideration. There is also a strong 
feeling in this country against any system of branch banking, 
especially by the National banks. Whatever the advantages 



NO POSTAL SAVINGS BANKS 309 

of a Central Bank — the facilities which a Central Bank could 
offer and the power of protection which it possesses in times 
of panic are objects that can be more easily attained by other 
and more practical means. Let us have large banks by all 
means if they are needed; but many of the ills which advo- 
cates of the Central Bank seek to eliminate are best provided 
against by intelligent, concerted action, such as the New York 
Clearing House in times of panic has repeatedly shown itself 
capable of rendering. 

The objections to a Central National Bank also apply to the 
Government's proposal to establish Postal Savings Banks all 
over the country. It savors too much of paternalism, and 
would add too much to the concentration of power in the hands 
of the Federal Government, to be advisable for the good of the 
country. 

Moreover, it would work practical injustice to the banks gen- 
erally, especially the savings banks, and all banks in country 
towns whose customers' deposits are mainly in small amounts, 
for most of these would doubtless be transferred to the Postal 
Savings Banks because of the security implied by the United 
States being the banker. 

But there is no good reason why the Government should go 
into the banking business, and the pledge in the Republican 
presidential platform that Postal Savings Banks would be es- 
tablished should not be regarded as any more binding than such 
ante-election promises usually are. We all know they are gen- 
erally ignored afterwards, and often made, like pie-crust, to 
be broken. 

Postal Savings Banks would involve an increase of many 
thousands in the number of Federal employees, which would 
correspondingly increase Federal patronage and paternalism 
and develop another political machine to influence elections, so 
that, in time, we should be in danger of having a Government 
largely chosen by office-holders, whose political power would 
be always baneful to the Nation. 

It would inevitably tend more and more, by slow degrees, to 
increase that paternalism, that concentration of power in the 



S10 NO POSTAL SAVINGS BANKS 

Congress and Administration at Washington, of which we have 
already too much; for the influence of Federal office-holders 
would always be to foster this concentration, and consequently 
tend towards dwarfing the power of the States and promoting 
socialism. This office-holding influence would also be opposed 
to any change of the political party in power, because a change 
would or might cause dismissals from the service. Presumably 
it would be exerted accordingly, without reference to the inter- 
ests of the people. 

This would be contrary to Republican principles, and a men- 
ace to our form of Government and to liberty itself. We should 
never forget, in the words of Patrick Henry, that eternal 
vigilance is the price of liberty, and encroachments upon it 
and our political rights are insidious and hard to undo and 
redress. 

Those urging the adoption of the Postal Savings Banks sys- 
tem here say that it has proved successful in England. But 
political and social conditions there, with its monarchical in- 
stitutions, differ greatly from what they are under our own 
free institutions and universal suffrage. 

The British Government was in a manner forced by the 
agitation of the socialists, in and out of Parliament, to establish 
Postal Savings Banks in England for the benefit of the work- 
ing classes, for both savings bank and other banks there were 
then few in number in proportion to population — in compari- 
son with their great abundance, or superabundance, here. 

So the English Postal Savings Banks may be said to have 
filled a long-felt want. They, nevertheless, represent a step 
in the march towards socialism that so many are wildly clamor- 
ing for, not only in England and Germany, but to some extent 
in other European countries, and of which we have frequently 
seen outcroppings in this country, although there is absolutely 
no excuse for socialism here. 

It should, therefore, not only be discouraged but denounced 
by all American citizens whenever advocated by the aliens who 
have brought this political heresy with them across the Atlantic, 



TOO MUCH PATERNALISM Sll 

for it is entirely uncalled for and out of place in the United 
States, besides being hostile to American institutions. 

In our free political and social atmosphere, socialism would 
be an anomalous growth, a festering sore upon the body pol- 
itic. Although our foreign population leans largely towards 
paternalism in government and therefore favors the establish- 
ment of Postal Savings Banks, — and desires them all the more 
because they exist in Europe, American citizens should not al- 
low American ideas on questions of public policy to be sub- 
ordinated to alien sentiment. 

As a nation we have always been self-reliant and paddled 
our own canoe. We should remain so, and make no concessions 
to foreign opinion, least of all to socialistic opinions, in the 
management of our public affairs, and especially in a matter 
of such National and financial importance as this. 

But, I am sorry to say, some of our politicians are so eager 
to catch the foreign naturalized vote, at elections, that they 
yield to-day more or less to foreign sentiment even on socialistic 
questions, and so encourage pernicious agitation on matters 
that concern our Government. There is clearly more of politics 
than patriotism in this. 

The American Bankers Association, ten thousand strong, and 
representing 98 per cent, of the country's banks, at its conven- 
tion in Chicago in September, 1909, unanimously adopted very 
strong resolutions against the proposed Postal Savings Banks; 
and I am fully in accord with these condemnatory resolutions, 
which read as follows : " That we should condemn in unqual- 
ified terms the proposition for the establishment of Postal Sav- 
ings Banks, or any other system by which the Government 
enters directly into banking relations with the people; that the 
American Bankers Association is opposed to any financial leg- 
islation based upon the argument that it was a Party pledge, 
and should be redeemed, and that we believe the proposed plan 
to invest Postal Savings Banks deposits to the extent of $600,- 
000,000 or $700,000,000 in United States bonds, simply to 
maintain such bonds at par, is unsafe and unwise legislation, 



312 NO POSTAL SAVINGS BANKS 

which, if enacted, would ultimately lead to lack of confidence 
in our National Credit." 

To fully appreciate the force of these resolutions it must 
be borne in mind that in the highest Administration quarters 
in Washington the chief reason advanced in favor of the 
creation of such banks is that the Government could use their 
deposits to buy its own depreciated 2 per cent, bonds for the 
purpose of raising them to par, and keeping their market price 
up to that point. But such an expedient, and makeshift, would 
be entirely unnecessary, besides being very objectionable and 
unworthy of the dignity and greatness of the United States. 

Moreover, such an expansion of the Government credit would 
operate to undermine confidence in our National finances, as 
the deposits of Postal Savings Banks would really be trust 
funds which would, in time, aggregate thousands of millions 
of dollars. 

The decline in the market price of United States 2 per cent, 
bonds, owned by National banks, and held, — with their other 
U. S. bonds, — by the Government to secure their circulation 
and Government deposits, should not cause the Government to 
seek a remedy, or even a prop, for this decline in the use of 
Postal Savings Bank deposits. Artificial support of the kind 
for the bonds would be unsound as a politico-economic measure, 
besides being provocative of distrust. Let the Government 
leave the bonds free to rise or fall, according to the ebb and 
flow of the market. The British Government does not try to 
prevent British Consols from declining, low as they are. 

A minor but still an important objection to Postal Savings 
Banks in this country would be the immense amount of clerical 
labor and bookkeeping they would call for, in proportion to 
the amount of the deposits, and their consequent costliness to 
the Government. The experience of the British Government 
has been very unsatisfactory in this respect, and the official 
head of the system in London very recently stated that about 
a hundred thousand of the depositors there never use these 
banks as savings banks, but merely as they would a purse, de- 



ENGLAND'S EXPERIENCE 313 

positing a shilling or so one day and drawing it out one, two 
or three days later. 

He cited an instance where a person deposited a shilling — 
25 cents — and soon afterwards drew it out again in six sep- 
arate sums of two pence each — four cents. This was certainly 
playing at banking at the country's expense. He said that 
each transaction of that kind cost the Savings Bank Depart- 
ment five and three-quarter pence, or more than eleven cents, 
this representing the cost of administration, postage and the 
commission which the Savings Bank Department has to pay the 
Post Office for the services of its staff. 

Moreover, he added, this way of using the banks, and forcing 
unprofitable business upon them, has steadily increased, and 
is becoming so general as to be a very serious evil, and formal 
notices have just been issued to depositors who are thus abus- 
ing the privileges of the system, asking them to discontinue 
the use of it as a current account institution, because of the 
increased expense to the Government, and to use it only for 
savings. 

From the books of many thousands of the smallest of the 
English depositors the Department compiled schedules showing 
that these depositors invariably paid in a small sum at the end 
of one week, only to withdraw part or the whole of it at the 
beginning of the next week. On single deposits of one or two 
shillings a number of persons drew more than seventy times last 
year, without having at any time had more than two or three 
shillings — that is, fifty or seventy-five cents — to their credit. 

It is reasonable to assume that we should have many thou- 
sands of similarly small and short-time deposits, with much 
ridiculously small checking against them, if we established 
Postal Savings Banks, and Congress in considering the subject 
should give proper weight to this troublesome and costly fea- 
ture of a Postal Savings Bank business. We should profit 
enough by England's experience to avoid it. 

Our Government is strong enough to dispense with all facti- 
tious and adventitious aid, and all doubtful means, in the man- 



314 NO POSTAL SAVINGS BANKS 

agement of its finances, and resourceful enough to be .entirely 
independent. It needs neither Postal Savings Banks nor a 
Central National Bank. These, I repeat, would be experi- 
ments; and financial experiments in new directions are always 
dangerous and disturbing. Conservatism should be our watch- 
word, and all radical measures should be studiously avoided 
and frowned upon, in the interest of the country's trade and 
commerce, as well as in the interest of good banking and 
financial stability. 

Instead of Postal Savings Banks, it would be better for 
Congress to authorize the National Banks to establish savings 
departments on a basis of ten per cent, special reserve for 
such deposits. This would meet the possible requirements of 
some of the people, particularly of those in thinly settled local- 
ities, where savings banks are as yet few and far between. 

So let us hope and pray that we shall have neither Postal 
Savings Banks nor a Central National Bank in this country, 
but let well enough alone, and — in the future as in the past 
— go on our way prospering more and more, to our own glory 
and the wonder of the whole civilized world. 



WOMAN IN POLITICS, NATURE, HISTORY, BUSI- 
NESS AND THE HOME 

ADDRESS DELIVERED BEFORE THE MEMBERS OF THE NATIONAL, 
SOCIETY OF NEW ENGLAND WOMEN, ON THURSDAY, FEBRUARY 
2-4, 1910, AT DELMONICO'S. 

AS we all know, and as we all fully appreciate, womanli- 
ness in woman and manliness in man are natural, and 
admired by all nations. A reversal of these charac- 
teristics is abnormal, and excites opposite sentiments, because 
what is unnatural is, in varying degrees, repulsive and un- 
becoming. 

So we should encourage and respect and honor womanliness 
in woman and manliness in man, and deprecate whatever tends 
to the opposite in either. 

In looking at both sexes, we should first study the place of 
each in nature. As man and woman were created to perform 
separate and distinct functions in life, they have their essential 
points of difference. 

Nature inflexibly maintains these points of difference, the 
most obvious of which is motherhood, and kindred physiological 
conditions, in woman, and opposite physiological conditions, 
coupled with superior average size, strength and endurance 
in man. 

The creation of the world, as described in the Book of 
Genesis, was followed by the creation of Adam, and then, we 
are told, from one of the ribs of Adam, Eve was created, and 
given to Adam as his helpmate. 

The Bible does not support, or in any way uphold, the 
equality of man and woman, for their creation was dissimilar 
in material respects, — that is, the manner of their creation was 
315 



316 WOMAN IN POLITICS 

different; the physical functions for which each is designed 
are dissimilar. The differences show they are unequal. 

The Bible — woman's Magna Charta — states her duties 
and her destiny, and as it nowhere speaks of her equality with 
man, we are left to assume that she was not intended to be his 
equal. Hence, man has gallantly treated her as his superior. 

This union of Adam and Eve was the first marriage on record. 
As woman was secondary in the creation, and subordinate to 
man from the beginning of the world, and created to be his 
helpmate, the children of men have ever since been following 
more or less in the wake of Adam and Eve. The wife has 
taken the husband's name, and prior to this generation woman 
was never, or hardly ever, known to resent being called the 
weaker vessel, or even to seriously dispute the allegation that 
her husband was her lord and master. But the times have 
changed, and who would dare to say this to beautiful woman 
now ? 

She was content, in the olden time, to occupy and confine 
herself to her own sphere, without any apparent desire to 
encroach upon man's, or to share his special privilege of voting 
at the polls, and filling official and business positions that had 
always been held by the sterner sex. 

But mark the tremendous development and transformation in 
this modern age of almost miraculous progress that have con- 
verted the woman of the past into a being that we never knew 
before, a being who has worked her way out of the home into 
tall the professions, and many, if not nearly all, of the industrial 
occupations formerly monopolized by men. 

In doing this she has, incidentally and unconsciously, elbowed 
many men out of their usual employment, and caused a reduc- 
tion in the incomes of many more, through competing with them 
at lower wages. 

But not content with her amazing success in business, and 
leaving home every morning to work all day in office, store or 
factory, to the destruction of much of her domestic life, she 
wants to enter politics, and asks for votes. 

She loses sight of her own limitations, of her place in 



WOMAN IN POLITICS 317 

Nature, when she does this. To her, domestic life, marriage 
and maternity, have become subordinate considerations, or mat- 
ters of indifference, if not to be avoided altogether. 

This modern woman, fortunately in the minority, is evidently 
dissatisfied with her lot, and aims to unsex herself and become 
as masculine as possible in her work, tastes and various activi- 
ties. 

By so doing she impairs, or destroys, her natural charm and 
grace, her feminine modesty, delicacy and refinement. Having 
placed herself in active competition with man in trade and office 
work, to say nothing of the legal and medical professions and 
the world of art, she now wants to compete with him as actively 
in politics. 

She does not shrink from the prospect of going through any 
ordeal that politics might impose upon her, if she succeeded 
in obtaining the suffrage. The coarseness, vulgarity, bad com- 
pany, mud-slinging, ballot frauds and malodorous crowds at 
political gatherings, and the other unpleasant adjuncts of 
political life, have no terrors for her. She wants them all in 
her eagerness for the right to vote. 

This is not an ideal state of happiness for a woman. It 
shows her to be in a very morbid condition of mind, and the 
sooner she emancipates herself from such thraldom the better 
for herself, her home and society. 

She is endowed and equipped by nature for a higher and 
more important sphere of action, and her activities should 
centre in her home life. She should endeavor to make that as 
much a paradise as is within her power. 

She should no more neglect or shun marriage and maternity 
than any other solemn duty in life; for the perpetuation of 
our race is a duty we owe to posterity, however unfashionable 
it may be to think or say so in these days of race suicide. 

The future of the nation is involved in this problem of our 
domestic life; and the woman who is hungering to enter the 
demoralizing theatre of politics should pause to consider how 
much of her time, energy, talent and means would be uselessly 
sacrificed if she succeeded in the object of her ambition. What 



318 WOMAN IN POLITICS 

would be of inestimable value to herself, her family, her friends, 
and the world, would be practically lost in the whirligig and 
maelstrom of political life, which is no place for a woman in 
any case. 

The more that even politicians of the sterner sex, in or out 
of office, know of politics, the more they are, very generally, 
disgusted; and this would doubtless be still more the case with 
Women. So politics would disappoint them; and, as women 
feel and take to heart disappointments more keenly than men, 
they would have all the more reason to regret that they had 
ever entered the political arena. 

Their time, as well as their beauty, their education, their ac- 
complishments, and their natural elegance, refinement, delicacy, 
tenderness and modesty, would be thrown away in politics. It 
would be like " casting pearls before swine " for them to sacri- 
fice so much for a vote. 

The suffragettes, and those of both sexes who are in passive 
or active sympathy with them, are greatly mistaken, in my 
opinion, as to any probable or even possible good that women 
would accomplish, or derive from the right to vote, even if they 
secured it. They imagine they could do much. They would 
find that they could do but little. 

In judging their suffragette sisterhood, women are them- 
selves the severest critics. They say the great majority of 
American women do not want the franchise, and would not 
vote if they had it, and condemn the agitation in its favor, 
and particularly the disorderly acts of the English suffragettes. 
They add that they are engaged in conservation of woman's 
strength, for in opposing the suffrage to women they seek to 
conserve woman's natural forces and powers for the ultimate 
benefit of coming generations. 

But, no doubt, the woman suffragists believe that the right 
to vote would be a great and good thing for woman. They 
have, however, no sound reason for believing this. They simply 
imagine it. That is, they delude themselves into this belief. 
The wish is father to the thought. 

They have come to look forward to the ballot box as a 



WOMAN IN POLITICS 319 

panacea for all the ills of their life. They might almost as 
well look to a graven image, or the man in the moon for it. 

Yet the English suffragettes have suffered ridicule, persecu- 
tion, imprisonment, starvation, and forced feeding by the 
stomach pump, in their battle for the suffrage. 

The idea that woman could purify politics by her vote, and 
make politics less corrupt, or government better than man has 
made it, is utterly illusory. 

Women in politics would be no better than men. They are 
one as to flesh and blood, and would be influenced by the same 
emotions, desires, motives and objects as men; and most of 
them, perhaps nearly all, would be led, directly or indirectly, 
by men. 

It is natural for women to be more influenced by men than 
men are by women in all business matters, and in none more 
so than the business of politics; for it would be a new and 
strange field of action for a woman to enter. If not led, she 
would be likely to drift aimlessly with the tide. She would 
be a novice at the game. 

This prospect, however, does not make the suffragette less 
earnest and determined in her quest for the suffrage. She has 
made Political Equality the goal of her ambition and feels pre- 
pared to make more or less severe sacrifices for it, thinking 
she will be amply compensated in the end. This is both a de- 
lusion and a snare, for the compensation would be mythical. 

So her zeal, her enthusiasm, her yearnings, her aspirations 
and her efforts are employed in a cause that would prove use- 
less to herself and fruitless to the world. 

In other words, woman suffrage would do no good to woman 
or society, and inferentially it would do her much harm, by 
impairing or destroying her greatest charms — womanliness, re- 
finement, delicacy and domesticity. Her greatest sacrifice would 
be in the sacrifice of this last but not least quality, and her 
home would suffer most by her loss of domesticity, whereas 
her home should be her pride, if not her paradise. 

The suffragettes, here and elsewhere, should turn their eyes 
to the States where the suffrage has been extended to women, 



320 WOMAN IN POLITICS 

and see what, if anything, they have accomplished there in con- 
sequence, in order to perceive how hopeless and baseless their 
expectations are of good results from woman suffrage. 

If they do so, they will find, both by statistics and public 
opinion, that woman suffrage has produced no improvement 
in political life, legislation or public morals. 

In Colorado — the State in which woman has long had all 
she asked for in the franchise and certain political offices — 
this is particularly the case. 

Politics are as corrupt there as ever they were, and it has 
been found that the professional gamblers, saloon keepers and 
criminal classes of the State influence, or practically control, 
a very large part of the votes cast by women. As this has 
often been asserted in public speeches by Colorado politicians, 
as well as by Colorado newspapers, it is presumably true. 

Woman is not mentally or physically well-fitted for the strife 
and distractions of politics, whereas man is. So she would be, 
as his political equal, seriously handicapped by this disadvan- 
tage. It would, as it has done in Colorado and wherever woman 
suffrage has been conceded, always make her largely subservi- 
ent to him. She would not have a mind and will of her own, 
and sufficient strength of purpose, firmness and self-reliance to 
consistently carry out any policy or line of action she might 
have in view. 

She would probably be watching and waiting to see what the 
men would say, or do, and be consciously or unconsciously 
governed largely by this feminine trait. Hence, she would be 
easily influenced by men, especially those she knew. More- 
over, she would never be a student of politics and the science 
of government, and she would not be as competent a judge of 
men and measures in voting for candidates as the average man 
of intelligence. Women should not be slow to recognize this, 
and should wisely leave politics to men. 

There can be no glory in politics for woman, because that 
is a sphere for which Nature has not fitted her and in which 
she is not adapted to shine. But she can find crowning glory 
in home-making and her domestic life, as well as in her own 



WOMAN IN POLITICS 321 

talents and . accomplishments, in music, literature, art, science, 
the drama and various industries. 

Women have excelled in all these ; and many, as we all know, 
have made themselves justly famous all over the world as 
novelists, as leading lights of the lyric and dramatic stage, as 
painters, and as holding very high rank in other branches of 
intellectual and artistic activity, to say nothing of their physical 
prowess and endurance in both work and sport. 

Among the famous women of the first era in the world's 
history we have Helen of Troy; Cleopatra; the mother of 
Alexander the Great; Portia, and Sappho. 

In the second era we find Joan of Arc; Victoria Colonna; 
Helena, mother of Constantine, and Isabella of Castile. 

In the third era we find Agostina, the Maid of Saragossa; 
Queen Anne of England; the Countess of Blessington; Cath- 
erine the First and Catherine the Second of Russia; Queen 
Elizabeth of England; Elizabeth Fry; Mrs. Hemans, the poet; 
Mrs. Gore; Mrs. Inchbald; Marie Antoinette, Queen of France; 
Mary the First, and Mary the Second, Queens of England; 
Mary, Queen of Scots; Pocahontas, of Virginia; Madame 
DePompadour; Madame DeStael; and, last, but not least, Mrs. 
Martha Washington, of the United States of America. 

In the fourth era we find Elizabeth Barrett Browning; Angela 
Burdett-Coutts ; Charlotte Cushman; Harriet Martineau; Cath- 
erine Maria Sedgwick; Madame Rachel; Mrs. Southworth; 
Mrs. Trollope; Victoria, Queen of England; Jenny Lind; 
Adelina Patti; Rosa Bonheur; Agnes Strickland; Emma Wil- 
lard; Harriet Beecher Stowe, and many others. 

All these women of genius achieved celebrity, in their time, 
in various ways, and many have become historical characters 
whose fame will endure forever. Yet none of them voted, and 
there is no record of any of them having ever expressed a wish 
to vote. The movement among women for the franchise is 
the most recent of modern political uprisings, and the apathy 
with which it is regarded by the great majority of women indi- 
cates how unsuited and foreign it is to a woman's nature. 

It is not a natural aspiration. It is an artificial craving, 



322 WOMAN IN POLITICS 

which if gratified would ultimately turn, like Dead Sea fruit, 
to ashes in her mouth. 

This is beyond question the golden age of woman, and never 
before was she so much in the lime-light of publicity as she is 
now, and never before had she so many educational advantages, 
so wide a field for the employment of her industry and talent, 
and so many rights and privileges under the law. 

The existence of so many prosperous women's colleges is a 
practical commentary on the spread of the higher education 
among women in this country, and the consequent intellectual 
elevation of women, and we see the good results in our litera- 
ture, science and art, and our business and social life. 

Women with richly cultivated minds meet us everywhere, 
and women who have distinguished themselves in various ways 
are equally numerous. 

In all literature and art the Angelic ideal of humanity is 
invariably feminine, and the higher education of woman has 
immeasurably increased her moral influence, while adding to 
her angelic quality — her personal charm. 

All the world's great discoveries, however, have been made by 
men. All the great engineering works and buildings of the 
world, and all the ships and navies that sail the sea, were built 
by men, and the legislation of all nations has been enacted by 
men; and can women lay the flattering unction to their souls 
that they could have governed, or built, with better results ? 

Women need no one to vouch for their abibty to do great 
things, and to achieve success in work for which they are 
fitted by nature and education, and they will always show wis- 
dom by confining themselves to what they can do best. They 
have unlimited scope for development and achievement in their 
own sphere. Their domain is no pent-up Utica that restrains 
them from the pursuit and accomplishment of any laudable 
purposes; and woman never before was as free and indepen- 
dent and as well protected by the laws of both this and other 
countries as she is in this progressive age. 

She ought to know when she is well off" and to be wise 
enough to let well enough alone; and I feel assured that a 



WOMAN IN POLITICS 323 

large majority of the women, both of this country and the 
United Kingdom, are satisfied with their lot without the right 
to vote. So they are neither suffragettes nor in sympathy with 
the suffragettes. 

Yet the suffragettes have been so active, and made so much 
noise in the world, as to create a general impression that the 
great mass of women want to vote. This erroneous impression 
is corrected by the establishment of women's anti-suffrage so- 
cieties, and the numerous protests of women correspondents 
against the woman suffrage movement that have appeared in 
the newspapers of the United States, Canada and England. 

But of the great and growing activity of the movement 
there is no question, and the centre of its activity is now the 
city of New York. Its leaders have learned that in unity there 
is strength, and hence the concentration of all the principal 
woman suffrage organizations here. 

This has become a pivotal point for their crusade, not only 
as to the State of New York, but the nation. There are ten 
of these suffrage organizations, namely: The National Amer- 
ican Woman's Suffrage Association, with the Rev. Anna Howard 
Shaw as President; The State Association of Woman Suffrage, 
Mrs. Ella Crossett, President; the Greater New York Woman 
Suffrage Council, Mrs. Carrie Chapman Catt, President; the 
Equal Franchise Society, Mrs. Clarence Mackay, President; 
the Political Equality Association, Mrs. O. H. P. Belmont, 
President; the Equality League of Self Supporting Women, 
Mrs. Harriet Stanton Blatch, President; the College Suffrage 
League, Miss M. Carey Thomas, President; the National Pro- 
gressive Woman Suffrage Union, Mrs. Sophia M. Loebinger, 
President; the Woman Suffrage Party, Mrs. Carrie Chapman 
Catt, Chairman; and, finally, the Men's League for Woman 
Suffrage, Mr. George Foster Peabody, President. 

Some of these represent large numbers of woman suffrage 
societies scattered through the United States, one hundred and 
fifty of these being in the State of New York, and auxiliaries 
of the State Association. 

All these New York City organizations are preparing for 



324 WOMAN IN POLITICS 

a campaign of great activity this year, and a Legislative Com- 
mittee has been appointed, with Mrs. Henry Villard as Chair- 
man. 

This Committee is to go again, if required, before the New 
York State Legislature, that is, before the Judiciary Committee 
of the Assembly and Senate, and make a strong effort to bring 
the Suffrage Amendment out of the Committee, to be voted 
upon. 

The Greater New York Woman Suffrage Council is the most 
important of these organizations, as nearly all the clubs in the 
city are affiliated with it and send delegates to its meetings, 
and over these Mrs. Catt presides. A special project of this 
Council is to secure a place upon the ballot by petition, if legis- 
lation at Albany cannot be influenced by direct appeal to the 
Legislature. 

In April the National Association is to hold a convention at 
Washington, and there present to Congress an enormous peti- 
tion, for which names have been, or will be, secured from 
every State in the Union. Meanwhile, it will give all possible 
aid and encouragement to the woman suffragists of the States 
of Washington and South Dakota, where legislative bills ad- 
mitting women to the franchise are to be voted upon, and do 
likewise in Oklahoma, if the suffrage campaign there should 
develop to sufficiently large proportions. 

I have dwelt thus lengthily upon the extensive preparations 
of the woman suffragists for a protracted and spirited cam- 
paign, with the purpose of showing what a formidable line 
of battle they are forming and what we may expect from their 
artillery. Forewarned, forearmed! Even when viewed as a 
popular craze, or as a wild goose chase, this movement is an 
interesting social study, for those under its influence are in 
dead earnest. 

Multitudes of men and women have been, in ancient and 
modern times, believers and crusaders in other causes, particu- 
larly where they have been swayed by religious fanaticism, yet 
all their ardent hopes and beliefs and struggles came to naught, 



WOMAN IN POLITICS 325 

because they were aiming at something not based on merit or 
common sense. 

How often we have read of religious gatherings, in churches 
and on hill-tops, to witness the Second Advent or the end of 
the world; and how often great bodies of enthusiastic but mis- 
taken reformers of various kinds have come to grief or lived 
to see the folly or error of their ways ! 

Woman has no need of a vote — no more need of it than a 
coach has of a fifth wheel. So why should she be running 
after this strange god? In doing so she is imagining vain 
things. She is superior to the need of a vote. The suffrage 
would only drag her down from her present high estate. 

The great fault of too many women in this era of our social 
development is that they do not take a rational view of life 
in relation to themselves. They see little or no charm in stay- 
ing at home, marrying, having children and rearing them in 
the way they should go, and making the home all that it should 
be. 

They want to go into business or the professions, the same as 
men do, and do their work away from their home, very often 
when there is no pressing necessity for this, with the too com- 
mon result that they have no homes worthy of the name, and 
that they either never marry, or never have children. This is 
a condition affecting the American population that will loom 
largely in the next generation; and meanwhile its effect upon 
our home life is much to be deplored. 

This aversion, or indifference, of woman to domestic life, 
or this diversion of her energies from the home to general busi- 
ness occupations outside of it, is not of itself womanly; and, 
unless it is absolutely necessary, it undermines her sense of 
womanliness, or divests her of that essential attribute of a 
perfect woman. 

Such women as I refer to undervalue the home, and also 
marriage and maternity, and the training of children, largely 
because they can find, or think they can find, more variety or 
diversion in business or professional employment, and more 



326 WOMAN IN POLITICS 

space for intellectual development. They want to earn money, 
and have a good time, and feel little or no sense of responsi- 
bility as to their future. They act as if their guiding motto 
was " sufficient for the day is the evil thereof." 

They, of course, take a false view of the capacity of home 
life for intellectual development and enjoyment, apart from its 
good moral effect, whereas employments away from the home 
are beset by many dangers and temptations to wrongdoing, 
moral laxity or frivolity. 

There are no finer or more natural opportunities for self- 
culture, mental and moral improvement and rational pleasures 
than are to be found in the ordinary home life of a woman 
who rears a family. The unmarried woman can have no such 
development and pleasures, although she escapes some of the 
pains and anxieties, and possibly some of the sorrows, that 
are apt, at times, to cloud a mother's life. 

The training, the education of her children, widens a mother's 
mental horizon, and her range of observation and thought. 
It quickens her understanding and perceptive faculties, adds to 
her own fund of knowledge on a variety of subjects and 
sharpens her wits generally. The children are constantly giv- 
ing her problems for solution. It is the best and most practi- 
cal and useful knowledge and culture she could have. It 
gives her a second education and new life. 

This culture, too, makes her a student of human nature and 
character, as presented in the varying qualities and character- 
istics of her children; and when they grow up and marry and 
have children of their own, her intellectual development grows 
still greater, and her sympathies widen still more in response 
to the new interests and later events of her life. No college 
course could equal this experience in the strengthening and 
quickening of her mind and moral character, and it can never 
fail to be a source of satisfaction and pleasure, not merely to 
herself, but to the household which shines in the reflected light 
of her wisdom and intelligence. 

No woman devoting her life, in celibacy, to work in an 
office, store or factory, could understand or feel the joy and 



WOMAN IN POLITICS 327 

charm, and the usefulness and dignity of such a life, with all 
its moral and social influence upon the rising generation. 

We have in her a picture of true womanliness, of a womanly 
woman devoted to her home and family, and domestic duties, 
and finding her pleasure with them in her home. Such a woman 
would be in no danger of ever becoming a suffragette. She 
would have neither time nor inclination for politics, and con- 
sequently no desire for a vote. Other, and, to her, more 
important interests would engage her attention. Such a woman 
is a home-builder, and the more home-builders like her that 
we have the better for the nation and its future. 

Let the suffragettes, one and all, never forget that the great- 
est charm in woman is womanliness, and that they should al- 
ways remain womanly women, not only for their own sake, but 
for the honor and glory of their sex. Never let them sacrifice 
their present acknowledged superiority for political equality 
with men, not even if they have the chance. 

It seems to me that the amelioration of social and industrial 
evils, and the betterment of conditions among the poor and the 
distressed, would be a far more useful and laudable object for 
women to take up and work for than woman suffrage. There 
would be practical utility, philanthropy and benevolence in 
this, and, among other things, it might point the way to 
eliminate the bread-line in our great cities, and to remove the 
causes which led thirty thousand girls and women (shirt-waist 
strikers) in the City of New York to stop work and brave 
destitution rather than continue to endure the oppressive condi- 
tions under which they had worked. 

Women of the better class in this country have more time 
than men immersed in business to devote themselves to such 
philanthropic and utilitarian work, and the attainment of the 
highest ideals. So the spread of the higher culture has been 
left largely to women, through the neglect of the men; and I 
am glad to be able to say that women have done good and 
noble and brilliant work in this direction, thus raising the tone 
of society. We, in the United States, are now on a vastly 
higher plane in this respect, through the superior education 



328 WOMAN IN POLITICS 

of women, than we were a century, or even half a century, ago. 

We have more public spirit, too, among our well-educated 
women than among our men. This is mainly owing to the nar- 
row, practical and entirely selfish way in which most men re- 
gard their business. They look at it very generally without 
any breadth of view as a mere means of making a livelihood, 
or making money, and without deriving any pleasure from it, 
whereas it should be a source of constant satisfaction, if not 
enjoyment to them. 

The same remark also applies to most of the great mass of 
women who are employed in mechanical work, and who are 
often apt to look upon it as a make-shift for the mere sake of 
the dollars it brings without feeling any pride in their work. 
But both man and woman, educated or uneducated, rich or poor, 
should always bear in mind that, like misery, happiness is very 
largely of their own making; and as Plato says, unless they find 
happiness in their work, they will never know what real happi- 
ness is. 

In considering the women and the domestic life of the present 
time, we must, however, make large allowances for the changes 
brought about by the progress of civilization. We cannot expect 
women, any more than the world, to stand still in these days of 
rapid movement and wireless telegraphy. 

As times change, fashions change with them. We cannot 
expect the women of our day to revert to the manners and 
customs of a century ago when the spinning wheel was a promi- 
nent feature in every household. Nor can we expect to restore 
the types of women that then existed and have passed away, 
or those of later generation that are fast disappearing. We 
must be tolerant of innovations. 

The women of Jane Austen's novels are seen no more. 
George Eliot's Mrs. Poyser ; Thackeray's Amelia ; and Dickens's 
Dora and Agnes have now very few counterparts in real life; 
while the type of Portia, the wife of Brutus, has become as 
extinct as the Dodo, although the world would be the better for 
the revival of so commendable a type. The problem before men 



WOMAN IN POLITICS 329 

and women alike is how best, as we change and develop, to 
change and develop for the better. 

We have many new problems to solve in our social life and 
we should endeavor to deal with them wisely, and guide where 
we can in the right direction, instead of ruthlessly opposing and 
trying to crush what we deem to be wrong. History shows 
that the rebel of one day may be the patriot of the next. 

But in all her changes, in all her progressive development, 
woman should never in any degree lose her womanliness, the 
charm that nature has endowed her with ; and to preserve it she 
should, in my opinion, avoid the ballot box as she would an 
arrow. 



A LUNCHEON TO THE PRESIDENT 

AT a Luncheon given in honor of President Taft on 
March 22, 1910, by the author, at his residence, 27 
West 51st Street, New York, the following were the 
invited guests: 

Dr. Nicholas Murray Butler, President of Columbia Uni- 
versity. 

Dr. John H. Finley, President of College City of New York. 

Ex-U. S. Senator McCreary, of Kentucky. 

Hon. Cornelius N. Bliss, Secretary of Interior under Mc- 
Kinley. 

Dr. Chester S. Lord, Editor of The Sun. 

John Hennessy, Editor of The Press. 

John A. Stewart, Former President of U. S. Trust Co. 

Conde Hamlin, Editor of The Tribune. 

Wm. D. Sloane. 

W. C. Reick, Editor of The Times. 

Dr. St. Clair McKelway, Editor of The Brooklyn Eagle. 

J. Edward Simmons, President of The Chamber of Com- 
merce. 

Cornelius Vanderbilt. 

H. J. Wright, Editor of The Globe. 

H. L. Stoddard, Editor of The Mail. 

Don Cameron Seitz, Editor of The World. 

Arthur Brisbane, Editor of The American. 

A. D. Noyes, Editor of The Evening Post. 

Hon. Seth Low, Ex-Mayor of New York. 

Rev. John Wesley Hill, D.D., Pastor Metropolitan Temple. 

Hon. Charles D. Hilles, Assistant Secretary of the Treasury. 

Capt. Archibald Butt, Military Aid to the President. 

Earl Grey, Governor General of Canada. 
330 



A LUNCHEON TO THE PRESIDENT 331 



GREETING BY MR. HENRY CLEWS. 

This gathering is non-partisan and non-sectarian. I have 
invited you here to a luncheon to meet the people's President. 
There is nothing political in our gathering. I have carefully 
selected as guests leaders in educational matters; the college 
presidents, and the representatives of our great newspapers are 
equally engaged in the cause of education, and I have chosen 
you as guests, thinking it might be gratifying to our President 
to meet you informally on this occasion. 

My distinguished guest is himself a great educator, and most 
of you are fellow workers in this laudable occupation. 

I am sure that you will all heartily agree with me in extend- 
ing a welcome to the man who is the President of the whole 
People, and I ask you to fill your glasses and drink to his 
health. I will ask Mr. Taft to say a few words in response. 
To guard against any of you talking back at him, there will 
be no other speakers called upon. 

Now, gentlemen, here's to the man we honor. To know him 
is to love him. Here's to his health; may he live long and 
happily. Here's to The President of the United States ! 



PEACE AND ARBITRATION 

ADDRESS DELIVERED AT THE BANQUET GIVEN IN HONOR OF THE 
PRESIDENT OF THE UNITED STATES BY THE AMERICAN PEACE 
AND ARBITRATION LEAGUE, AT THE HOTEL ASTOR, NEW YORK, 
MARCH 22, 1910. 

TO secure Peace be prepared for War. — Four words ex- 
pressed the sentiment of General Grant at the closing 
of the Civil War, and those four words were, " Let us 
have peace ! " These will live long after the deeds and words 
of many of our statesmen are forgotten. When war was neces- 
sary, he was ready to fight. When necessity called for the 
sacrifice of human life, he sent his brave soldiers to their death 
without a second thought. So when he said, " Let us have 
peace," they carried a glad message to all sections of the United 
States. The iron hand was stayed by the gentle, felicitous 
words of our great chieftain. 

We desire lasting peace with all nations. We also desire 
lasting peace between all other nations, hence our league was 
formed, and we are working to secure this grand result, to 
abolish war with all its attendant suffering and cost in life and 
money. War is murder and robbery. 

To insure peace we must, however, be fully prepared for 
war. Our State militia must be kept well drilled and well 
disciplined. Our regular army must be kept in the highest 
state of efficiency. Our navy also must be kept in the front 
rank. Dreadnoughts must be superseded by still stronger 
Dreadnoughts. We must be so fully armed that we can com- 
mand the respect of the world. 

During the recent strike in Philadelphia the police were un- 
able to awe the mob. A company of militia was called out, 
332 



PEACE AND ARBITRATION 333 

and being hampered by orders not to use their guns, they be- 
came a plaything for the rioters, and suffered unjust humilia- 
tion. Their bravery cannot be questioned, as they obeyed 
orders. 

When the State Constables — a little over two hundred 
strong — appeared on the field, a different state of affairs was 
apparent. These men were known to be dangerous targets for 
abuse by mobs. Their business is to shoot to kill when neces- 
sary to preserve order and insure peace, and although the 
crowds had jeered and rough-handled the militia, they broke 
in terror before the levelled guns of this handful of determined 
enforcers of peace. 

Our country needs a navy more efficient than that of any of 
our neighbors across the oceans, and if we possess it, foreign 
powers will, like the Philadelphia rioters, hesitate to provoke 
us by injustice. We will, in this way, become the one nation 
most respected — even if not feared — as we have no personal 
interest in foreign quarrels and would very likely be chosen arbi- 
trators for that reason. 

Our sister society, of which Mr. Carnegie is the spokesman, 
believes in disarmament of nations. This belief is grand in 
theory, but not practical at present. I sincerely hope that the 
time will come when all nations will abandon the idea of war 
as being cruel and unnecessary; but until that time comes we 
must take human nature as it is, and not as we wish it to be. 
Our youth and our younger men have idealized the warrior 
both in history and romance. Victorious generals have vied 
with kings in the love and respect of the people. The Panama 
Canal alone is a reason for our keeping pace with the world 
in naval strength. During the years that will elapse before 
its completion we should use every effort to add to the number 
and efficiency of our warships. I believe in the most liberal 
appropriations for offense and defense, yet hope and pray that 
universal peace may prevail. 

Every nation will, in the future, study the probable cost of 
war before engaging in it. England learned a lesson in her 
Boer war. Russia and Japan were forced to become great 



334 PEACE AND ARBITRATION 

borrowers in the money markets of the world by their struggle. 
These were object lessons which reminded rulers that armies 
could not be equipped and maintained except through the co- 
operation of the money lenders. I know something about the 
raising of war funds, as I was one of those most prominent in 
selling the United States bonds in the beginning of our Civil 
War in 1861. The money stringency which almost tied up the 
world during the panic of 1907 was the direct result of the 
Boer-English and Russo-Japanese wars. 

When our great Panama Canal is finished, some of the 
South American countries may become a tempting bait to some 
foreign country, and we may be forced to assume the aggres- 
sive, as well as the defensive, so it behooves us to be awake and 
on our guard. As a man takes out a policy for fire insurance, 
hoping there will be no necessity for using it, so we must build 
ships and fortifications as insurance, hoping never to fire a gun, 
except as a salute to the flag of some friendly power. I sin- 
cerely hope that the efforts of our organization and of all those 
who sympathize with us may be conducive to peace on earth 
and good will to men. 

The navy is our national police on the ocean. Before we 
withdraw our warships from service and discharge our officers 
and crews it might be well to follow the suggestion of our 
famous Admiral " Bob " Evans, and experiment by abolishing 
our police force in our cities, and trusting to the good nature 
of our criminal classes and their sense of honor to be good 
citizens and respect the rights of their fellowmen. When this 
experiment is made I want a city that is far removed from 
New York chosen as an example. While I do not mean to 
imply that the rulers of our sister nations are to be compared 
to criminals, I do assert that human nature is not to be im- 
plicitly trusted where large interests are concerned, when it 
becomes necessary to give as well as to take. 

There is an old principle that " My country is always in the 
right." The citizens of France and Germany both had this 
idea about forty years ago, and it cost millions of money and 
thousands of lives of brave men to contest which was right; 



PEACE AND ARBITRATION 335 

and in the end might prevailed and the Frenchmen acknowl- 
edged defeat, but still believed that their cause was just. 

I sincerely believe that their differences might have been 
settled by arbitration. I would not, however, advise either 
nation to disband its army or navy until a universal sentiment 
prevails for universal peace. In my opinion, the only way to 
secure this great blessing is to push the idea that arbitration 
by friendly powers is the true and manly way to obtain justice 
with honor for all. 



A WELCOME TO HEROES 

AT a Luncheon given in honor of Sir Ernest H. Shackle- 
ton and Commander Robert E. Peary at 1 o'clock on 
Wednesday, March 30, 1910, at Sherry's by Henry 
Clews, the following toasts were given by Mr. Clews: 

TOAST TO SIR ERNEST SHACKLETON. 

There is an old saying in Wall Street that the pauper of 
to-day may be the millionaire of next year. So it is in the 
scientific world; the comparatively unknown inventor or ex- 
plorer of one year becomes the central figure of the world in 
the next year. 

Our own countryman, Commander Peary, has won his place 
in history as the discoverer of the North Pole, and we are 
naturally proud that he is one of us. Sir Ernest Shackleton 
has stamped his name in brilliant letters on the pages of his- 
tory as a South Pole explorer, where future generations may 
see it. Although he is not our countryman, he is of the Anglo- 
Saxon race, and speaking our language we claim him as one 
of us, and almost regret that he belongs to the old country. 
Nevertheless, let us help him to forget this accident of nation- 
ality, and by our hospitality and fair judgment show him that 
we appreciate his great achievement, and wish to do honor to 
him just as much as if he were one of our own citizens. 

Having seen his charming wife, we realize how hard his 
labor was in getting so very near the South Pole, as it neces- 
sitated a long absence from home and loved ones. While he 
did not succeed in actually reaching the South Pole, he cer- 
tainly has been the pathfinder to it, and doubtless will some 
day in the near future, if all goes well with him, achieve the 
great object he so narrowly missed by the mere accident of 
336 



A WELCOME TO HEROES 337 

running short of provisions. That he may be in every way 
successful in the great object of his quest is, I am sure, the 
earnest wish of all of us. 

Meanwhile, I hope his stay in this country will give him as 
much pleasure as it affords our own people, and that when he 
returns home crowned with the success he deserves he will 
sometimes wish that he were among us again, or at least, that 
he will not forget his admiring friends in the United States. 

Gentlemen, I ask you to fill your glasses and drink to the 
health of my world-renowned guest, Sir Ernest Shackleton. 

Long may he live; 
Happy may he be; 
Blest with content, 
And from misfortune free ! 

TOAST TO COMMANDER ROBERT E. PEARY. 

It is a coincidence that we have with us to-night two men 
whose sphere of action has been as far apart as the poles. 
While one failed to reach the goal of his ambition simply be- 
cause of lack of food, the other accomplished his ambition 
simply because he had been fighting for years and realized 
all needs, and was amply prepared to meet all conditions. 

I am sure that no one present takes more pleasure and pride 
in honoring the man who reached the North Pole than Sir 
Ernest H. Shackleton. I ask him and you to drink to the 
health of Commander Peary ! 

TOAST TO PROF. HERSCHEL C. PARKER. 

We have with us to-day a very modest gentleman, who is 
about to attempt the seemingly impossible. One, whose where- 
abouts are now unknown, claims to have accomplished the feat, 
but our fellow guest is about to test the truth of this claim. 

Gentlemen, I propose this toast: Success to Professor 
Parker; may he plant our flag on the top of the mountain 
named after our beloved martyr President, and live long to 
enjoy his honors! 



338 A WELCOME TO HEROES 

The guests comprised the following: 

Hon. Joseph H. Choate, 
Archer M. Huntington, 
J. Edward Simmons, 
Francis Lynde Stetson, 
Stuyvesant Fish, 
Prof. E. It. Seligman, 
A. Barton Hepburn, 
Morton F re wen, 
Prof. Herschel C. Parker, 
Isaac N. Seligman, 
E. R. L. Gould, 
Robert E. Ely, 
George Blumenthal. 



THE WORLD'S FAIR IN 1913 

ADDRESS DELIVERED AT THE WORLD'S FAIR BANQUET ON MONDAY 
EVENING, MAY 9, 1910, AT THE HOTEL ASTOR, NEW YORK, 
THE AUTHOR BEING CHAIRMAN OF THE CITIZENS' WORLD'S FAIR 
COMMITTEE. 

I AM heartily and sincerely in favor of holding a World's 
Fair in New York City in commemoration of the settle- 
ment, by the Dutch, of Manhattan Island in 1613. 
The three hundred years that have passed since that time 
have been fraught with momentous results, and to us they 
seem to be the greatest in the history of the world, as they 
saw the settlement, the growth and the building up of this 
great and magnificent city. 

The sturdy Dutch character — an unusual combination of 
aggressiveness and conservatism — has left a permanent mark 
upon American civilization, nowhere more apparent than in 
this very city of New York, the history of which abundantly 
testifies to the wisdom and ability of citizens of Dutch origin. 
It is pre-eminently fitting that this exhibition should take place 
in New York and at the time proposed. 

The only possible drawback to the success of this exposition 
in New York is perhaps to be found in the somewhat limited 
facilities we have for transporting the masses who would visit 
our city to attend the celebration unless the Fair was very 
centrally located. So we must choose a site for the Fair build- 
ings so situated that all lines of railways would be within easy 
reach to furnish comfortable transit to and from the Fair 
grounds to our diiferent boroughs. It should likewise have a 
water frontage so that a part of the multitude could be carried 
by steamboats. This would not only relieve the car lines, but 
339 



340 WORLD'S FAIR IN 1913 

would enable visitors to obtain a view of our splendid harbor 
and rivers, particularly the Hudson, whose picturesque glories 
vie with those of the Rhine. If improperly or inconveniently 
situated the Fair might prove an unfortunate undertaking. It 
will, therefore, not be well to take any chances, so we must 
organize at once and start the preliminary work in order that 
when 1913 dawns our lamps may be filled and burning. 

It is no small task that confronts us, and we must enlist an 
army of willing workers who will pull together under the im- 
pulse of public spirit for the good of all. This World's Fair 
can be made an object lesson to the world at large and, as an 
educational factor, show not only to the people of the United 
States, but those of all nations, the greatness and vast resources 
and natural advantages of our city. 

Europeans generally know less about New York City than 
the people of this country know of foreign cities. Compara- 
tively few across the ocean realize that our harbor is the prin- 
cipal gateway to the land where over 91 millions of people live. 
Thousands who have never been in America will visit us if 
we make the Fair worthy of the Empire City. Our tourists 
take millions of our money over the seas every summer and 
spend it on their Old World travels. This celebration of 1913 
would certainly bring thousands of foreign tourists, and mil- 
lions of foreign money, to us, and we should not fail to impress 
them with the idea that it will compensate them to visit us at 
that time and become acquainted with our country from ocean 
to ocean. 

As the late President McKinley said, " Expositions are the 
timekeepers of progress ; " and in my belief there cannot be too 
many of them, as they serve to demonstrate the progress made 
in science, arts, education and industry. 

But the New York International Exposition will have a 
greater object in view than the other expositions, to wit: the 
development of foreign trade, which, according to statistics, 
could be materially increased. 

Expositions serve also other purposes. They stimulate the 
citizens to embellish their city by opening beautiful new thor- 



BENEFITS TO NEW YORK 341 

oughfares, erecting fine buildings, and generally making of 
the surroundings of the exposition a most beautiful spot. St. 
Louis and Chicago are examples of what an exposition can do 
to develop that part of a city where an exposition is held. 

Losses, if any, in expositions are few and are generally 
caused by mistakes which, knowing them, we won't repeat; 
but New York on that score is lucky, as by reason of its large 
population it does not fear to lose, because it could if necessary 
sustain its exposition and come out winner. 

The large amount of money that will be spent in the con- 
struction of the exposition will be of great benefit to our city. 
At St. Louis more than $50,000,000 was spent to build that 
World's Fair, and possibly that much more on the outside of 
that World's Fair. And if that amount was spent for an ex- 
position in a city of six hundred thousand inhabitants, how 
much more will be spent in a city like New York with a popu- 
lation of five millions? 

We are in this matter fortunate in having the approval and 
co-operation of the President of the United States and the 
Governors of the various States. We shall also need the help 
and hearty support of the whole mass of our people, women 
as well as men. New York City is the Mecca of the pilgrim- 
age of the traveling public of the United States, and hundreds 
of thousands will make this the opportunity of their lives to 
visit us. 

We pride ourselves on being the greatest people in the world 
in enterprise and organization, and to make the Fair a suc- 
cess we will have to prove that we are worthy of this conceit. 
So we must see to it that our various committees contain the 
names of men who are able and willing to devote their time and 
brains to hard work. Brains will always attract capital, so, 
if we give assurance that this Fair will be managed in the same 
way that our big business men have managed their personal 
affairs, the money necessary for the enterprise will be forth- 
coming. 

We have three years in which to prepare for the Fair, and 
it will not do for us to remain idle even in the near future. 



342 WORLD'S FAIR IN 1913 

It should be our purpose to have all preliminaries attended 
to at the earliest possible date, so that when the time comes 
for opening the gates of admission everything will be in readi- 
ness for the public. 

The bridges recently built between Manhattan and Brooklyn 
in this respect should be a lesson to us. 

I hope to hear expressions from the able allies we have with 
us to-night, and expect that this banquet will be followed by 
another more than three years hence when we shall be able to 
congratulate ourselves, on the success of the World's Fair, 
which will then be a thing of the past. 

From a purely business standpoint our city will benefit im- 
mensely in the large earnings of our local transportation com- 
panies, our hotels, and our places of amusement, as well as in 
an enormous increase in the trade of our retail stores. Every 
World's Fair has served to educate not only young people but 
those of all ages. 

Apart from the exhibits of the various countries, the novelty 
of meeting and dealing with the attendants of the booths of the 
respective nations dressed in their native costumes lends a 
charm, and incites us to study the history and customs of other 
lands and races. The exhibits themselves are barometers in- 
dicating the intelligence, skill, and brain power of the various 
races and nations. Here in New York City we have hundreds 
of thousands of people who cannot even speak our language. 
To them the Fair will be a revelation — an object lesson that 
will impart through the eye knowledge that no book could con- 
vey to their minds. Many of them are anxious and willing to 
learn, but are handicapped by having little acquaintance with 
our customs and comparative ignorance of any sphere outside 
the limits of the East Side, or the Syrian quarter on the lower 
West Side. 

Our mechanics and those who assist in manufacturing scien- 
tific instruments and appliances can obtain a definite notion 
in this way of the results of their labors, and can make com- 
parisons between the result of their work and the work of for- 
eigners. 



ITS EDUCATIONAL INFLUENCE 343 

As art galleries and the theatre impress pictures of great 
historic events in our memory, so the exhibits at a World's 
Fair are to our minds tangible evidence of what we have hith- 
erto believed but have not seen. 

A friend of mine who was on the verge of nervous exhaus- 
tion from overwork was ordered by his physician to get away 
from Wall Street for a few weeks, and spend a large portion of 
his time each day in visiting the large department stores and 
examining their display of goods. As he had seldom entered 
such places he obeyed orders and found so much to change the 
current of his thoughts that this simple remedy was better than 
medicine. 

Now a World's Fair would equal in extent hundreds of even 
our largest stores, and the novelties exhibited would rest and 
divert the mind, and tire the body, thereby inducing sleep. 

Since 1876 we have never had a Fair on a large scale near 
enough to New York City to allow those of small and limited 
means to spare the money and the time to attend; so if we now 
get ready to provide the entertainment this class will be our 
strong ally in promoting its success. 

Within a few hours' ride of the city of New York reside over 
fifty millions of people, each and all of whom would feel grati- 
fication and a personal interest and a pride in aiding in our 
work to the extent of their ability. In the eyes of the world 
New York is supposed to care for nothing but the accumula- 
tion of wealth. Our traducers think that graft is the chief 
reward of merit. Let us bring these people here and prove 
to them that we are human beings with noble and patriotic 
aims and aspirations, who consider honesty and honor the foun- 
dation of our business and social life, and, even if we had no 
higher motive, honesty is always the best policy. 

Let us make this exhibition representative of the WHOLE 
United States — not any particular section of it, nor any spe- 
cial interest, but the entire country. Let the mine and the 
mill, the forest and the farm be represented by the very best 
we can produce. No country in the world can boast of such 
variety of products, or of such versatility in human handiwork, 



344 WORLD'S FAIR IN 1913 

whether it be the fruits of the Pacific coast, the grain and cat- 
tle of the West, or the looms and furnaces of the East. In 
all of these spheres of industry we excel, and our skill in pro- 
duction is only matched, if not surpassed, by our ability to 
handle and transport the billions in value of products which 
we annually raise; for nowhere is transportation more effective 
or cheaper than in the United States. National and civic 
pride are powerful stimulants to great effort, and these should 
unite in so guiding this enterprise as to produce the greatest 
good to the greatest number; seeking not merely the largest 
product, but the highest efficiency. Efficiency, the watchword 
of modern business, should be the central purpose of this exhi- 
bition, not merely in its organization, but as a practical demon- 
stration of one of the mainsprings of American progress. 

Let us all join hands to make the World's Fair of 1913 a 
glorious success. 

Ladies and gentlemen, it is now my privilege and great 
pleasure to introduce to you His Honor, William J. Gaynor, 
Mayor of the City of New York, who has kindly consented to 
preside at this banquet and act as toastmaster. 



KING EDWARD THE SEVENTH 

ADDRESS DELIVERED AT THE METROPOLITAN TEMPLE, NEW YORK, 
ON SUNDAY, MAY 15, 1910, ON THE DEATH OF EDWARD THE 
SEVENTH, KING OP GREAT BRITAIN AND IRELAND, AND EMPEROR 
OF INDIA. 

MY Friends and Fellow-mourners: I am invited here 
to-day to say a few words upon the great loss that has 
fallen upon Great Britain and her colonies, as well as 
on our own nation and other nations. Edward the Seventh — 
the best king Great Britain and her colonies ever had for the 
good of the nation and the benefit of the English-speaking race 
everywhere — the world's Peacemaker — the great friend of the 
American people is dead! I am sure that all sincerely sym- 
pathize with his family and his subjects, and mourn with them 
in their bereavement. 

King Edward's last words: " I think I have done my duty; " 
and dying with that memorable sentence upon his lips summed 
up the career of the man better than whole volumes of praise 
could ever do. These words convey to us the meaning of his 
life and his successful reign of nine years. He seems to say 
to posterity: "I die peacefully and with a contented mind, 
for I have done my duty to my God, to my country, my sub- 
jects and my family, to all other nations, and to mankind. I 
have done my best to maintain peace throughout the world, and 
I leave this same solemn duty to my beloved son and successor 
with the hope that the world's peace will be continued by him 
and others to follow for the benefit and betterment of the 
whole human family ! " 

The death of King Edward was a sudden and startling blow 
345 



346 KING EDWARD THE SEVENTH 

not only to the people of England, but to the whole British 
Empire, which circles the world. 

It fell, too, upon all nations with all the greater force be- 
cause of its suddenness; for he was so universally known and 
liked, and so beloved by his own country that he left a great 
void behind him. 

The shock of his taking off by the great Reaper, Death, al- 
most struck England dumb with pain and sorrow, for never 
had England so popular a sovereign, and we of the United 
States in particular, deeply sympathized with England in her 
irreparable loss, and shared in her sadness. 

In an address delivered by me over a year ago I stated that 
the four greatest statesmen in the world were Prince Ito, Theo- 
dore Roosevelt, King Edward and Emperor William. Prince 
Ito met an untimely death, but like our martyr Lincoln will 
live in the hearts of his countrymen as one who made them 
great in the eyes of the world. 

While King Edward lay dead upon his bier — the two re- 
maining, Roosevelt and Emperor William, by a strange coinci- 
dence, met personally for the first time, and will represent their 
respective nations in the funeral procession on the 20th of this 
month. 

We felt that we knew King Edward well. He, when Prince 
of Wales, had come to us as far back as the year I860; he 
was then a youth of nineteen, and we had entertained and feted 
him royally. 

He often said that he greatly enjoyed his American visit, 
and was sorry when it ended, and there was every reason why 
he should have enjoyed it. From the time he landed at St. 
John's, Newfoundland, from the British man-of-war Hero, in 
July, till he sailed by her in October, from Portland, Maine, 
on his return trip, all went well with him, and all concerned 
did their best to make his trip all that he could wish. 

He admitted that they succeeded admirably. Wherever he 
went in the British Provinces a grand ball in his honor was 
given him by the city, or town, he tarried at, for he was fond 
of dancing, and never tired of it. Indeed he seldom missed a 



KING EDWARD THE SEVENTH 347 

dance. I speak from personal knowledge, for I had the pleas- 
ure of being appointed to dance in one of his cotillons, at a 
ball given in the old Academy of Music, which was at that 
time the grandest opera house in this country. During this 
function a part of the temporary flooring gave way, but by 
Providential good fortune the Prince escaped injury, although 
it was a hair-breadth escape, for both he and I were very close 
to the spot where the floor caved in. 

As Prince of Wales he was an attractive society man, and 
much in demand, and Queen Victoria was very proud of him. 

His good taste, tact, and agreeable manners were always in 
evidence, also his democratic leanings towards people in gen- 
eral, which especially added to his popularity. He was quick 
to discern the good qualities in those he met, and to show them 
his appreciation; and it was so, more or less, with all persons 
and things with which he came in contact. 

Yet he was a great stickler for the observance of court eti- 
quette and the dignity of the Crown, just as Queen Victoria 
always was. He liked pageantry, grandeur, and splendid and 
elegant surroundings, and polite and refined manners among 
those he met, whether officially or socially; and he naturally 
disliked the reverse of these. 

He was a born diplomat, and instinctively knew how to do 
the right thing at the right time, and to do it graciously and 
unobtrusively. Hence after he ascended the throne, — when 
Queen Victoria died at Osborne House, Isle of Wight, on Jan- 
uary 22, 1901, — he exerted through his personal qualities, 
coupled with visits to the Continent, great influence in political 
matters, and notably foreign affairs. But he was so diplomatic 
as to do it unobtrusively, and this made his power, as an un- 
seen force all the greater. 

He spoke good English, of course, but he had acquired, in 
his childhood, from his father, Prince Albert, who was a Ger- 
man of the house of Saxe Coburg Gotha, a slight German 
accent; and although this wore away with time, it was always 
perceptible in some degree, to a quick ear. He also spoke Ger- 
man with an English accent. 



348 KING EDWARD THE SEVENTH 

Of this union of Queen Victoria and Prince Albert, he was 
born at Buckingham Palace, London, on November 9, 1841, 
where he died at midnight on Friday, the 6th of May. He 
was created Prince of Wales when a month old. 

He grew up under the educational care of private tutors at 
home, and was then sent to Edinburgh University for a course 
of study, following which he went to Oxford University for 
one year, and then to Cambridge University for three years' 
residence, and there matriculated. 

When he was eighteen, Queen Victoria, — his father having 
died previously — wrote him that he was free from parental 
control, and her letter made him cry with joy. It was, how- 
ever, at his mother's suggestion, that, a little later, he made 
his voyage to America. She had been invited by Canada and 
the other British American Provinces to visit those great col- 
onies, but feeling unwilling to go so far from home herself 
she wished the Prince of Wales to make the trip in her stead. 

He jumped at the chance, and, as we saw, had a gala 
time, first on the island of Newfoundland, and then on the 
mainland, passing through Nova Scotia, New Brunswick, Lower 
Canada and Upper Canada to Niagara Falls, before crossing 
the line to the United States. In the British provinces he 
traveled as the Prince of Wales, and everywhere received 
royal honors, with every place that he went to profusely fes- 
tooned with bunting and other decorations. He was the 
Queen's representative. 

But when he entered the United States he suddenly became 
Baron Renfrew, one of his numerous titles, and expected no 
royal honors. In other words he traveled incog. But prac- 
tically he was treated in the same way as if he still called him- 
self the Prince of Wales. 

He was in the habit, while in British territory, of reading a 
written reply to every address presented to him by public 
bodies, from a paper prepared for him by his suite, and in the 
last of these he said: " My duties as representative of the 
Queen cease this day, but in a private capacity I am about to 
visit, before I return home, that remarkable land which claims 



KING EDWARD THE SEVENTH 349 

with us common ancestry, and in whose extraordinary progress 
every Englishman feels a common interest." 

Crossing from Windsor, in Canada, to Detroit, he went on 
to Chicago and St. Louis, and, midway, staved a couple of 
days on an Illinois prairie at Dwight, to participate in a hunt, 
or rather shooting expedition. He was a good shot, like his 
father, and they had hunted together in England. He said 
at Dwight that he had enjoyed his sport there immensely. 

He traveled no further west than St. Louis, and no further 
south than Richmond. But he freely admitted that he was 
charmed with the girls everywhere, and in New York and Bos- 
ton particularly he was in his dancing element. His military 
uniform — as a colonel of the Guards — with its red coat and 
dark trousers, was very becoming to him, and at a ball all the 
girls wanted to dance with him. But his partners were always 
chosen for him, and he never danced twice with the same 
partner. 

In the year after he returned home he met the Princess Alex- 
andra of Denmark, and on the 10th of March, 1863, they were 
married. Six children were born to them. The eldest son, 
Prince Albert Victor, of Wales, Duke of Clarence, died in 1892, 
while engaged to be married to Princess Mary Victoria of 
Teck, whom his brother George, Duke of York, the present 
King, afterwards married on July 6, 1893. Six children have 
also been born to them, five of them sons. So there is no 
immediate danger of the royal line dying out. 

Both King George, born on June 3, 1865, and his wife, made 
a tour of Canada in the year 1900, as the Duke and Duchess 
of Cornwall and York, and failed to visit Uncle Sam's do- 
minions. 

King Edward was even more of a sportsman than a society 
man, and his taste for sport increased with advancing years. 
He was interested in sports of all kinds, particularly horse 
racing and yachting, and one of his horses won a race on the 
day before he died, and he was told of it. As a yachtsman he 
often won the Queen's cup at Cowes, Isle of Wight. 

Next to sport, or perhaps even above it, he was fond, as the 



350 KING EDWARD THE SEVENTH 

world knows, of the society of beautiful women, of all nation- 
alities, and he could talk to them in French, Italian and Rus- 
sian, besides German and English. 

He was cosmopolitan in his tastes and kept in touch with the 
needs of the world, through the newspapers, which he had read 
to him. Moreover, he had more decorations, medals and orders 
from foreign countries than any other man in the world, and 
wore many of them on his breast on state occasions. 

He was generous enough to forgive indiscretions in both 
friends and foes, and never harbored resentments, or tried to 
pay off old grudges. Hence he was as popular in his clubs as 
elsewhere, and always held to be " a jolly good fellow." 

Take him all in all we shall not see his like again, especially 
in his friendship for America and Americans. He promoted 
the social success of many of our countrywomen among the 
English nobility, and helped to bring about several marriages 
between his friends and American heiresses. 

He was as much at home in Paris as in London, and to him 
alone was due the friendly relations now existing between 
England and France, which were before strained. It is to be 
hoped that his death will not weaken the ties of friendship be- 
tween the two countries, and that the present King will be as 
fortunate and successful in his reign as his father was both 
nationally and internationally. Meanwhile America joins with 
England and the rest of the world in mourning his loss. 

His loss to England in the present political crisis there is 
particularly great, for he was a wise and conservative adviser, 
and skilled in steering between the Scylla and Charybdis of 
hostile parties. 

He always worked for peace and prosperity, and, above all, 
for peace and goodwill among nations; and he influenced 
French and Russian sentiment in favor of England more than 
the world knows, and did much to smooth asperities with Ger- 
many. 

How far he would have succeeded in effecting a settlement 
of the bitter and revolutionary party differences in his own 
country in this great crisis in its political history, we are left 



KING EDWARD THE SEVENTH 351 

to imagine. But it is to be hoped that his successor on the 
throne will, by the exercise of similar qualities be able to follow 
in his footsteps to successful results. So let us wish him God- 
speed in the career before him. The world will watch him 
closely in the fierce light that beats upon a throne. 

The death of King Edward has caused a truce in this great 
political struggle in Great Britain, and it is more than likely 
that during the coming year a compromise may be effected. 
So that, the King dead, may still be a factor in securing peace 
and goodwill in the land he loved and ruled so well. 



MEMORIAL DAY ADDRESS 

BY THE AUTHOR, AS THE PRESIDING OFFICER OF THE EVENING, AT 
THE EXERCISES CONDUCTED UNDER THE AUSPICES OF THE 
GRAND ARMY OF THE REPUBLIC, AT CARNEGIE HALL, NEW 
YORK, MONDAY, MAY 30, 1910. 

COMRADES and Friends: The flattering remarks just 
made by Comrade General Loud overwhelm me. I as- 
sure you that in the days of sorrow and strife in the 
early " sixties " I followed the dictates of my conscience and 
served my country in the way in which I thought I could do the 
most good. 

When the time comes to close my eyes in the last long sleep 
I hope I can truly say, as did the late King Edward, " I think 
I have done my duty." 



It is an honor and a pleasure to me to be invited to act as 
presiding officer of this meeting held to do reverence to the 
brave men who gave their lives to save the Union. The pres- 
ent generation is a little careless, and to many Memorial Day 
is not as sacred as it should be. 

But such of us as lived during the trying times in the early 
sixties feel the spirit of those days when we see the survivors 
of our Army march through our streets on the 30th day of 
May in each year. The ranks are fast thinning out, and to the 
veterans still with us we should do great homage. 

Those who have gone across the silent river have, by their 
deeds, earned a tribute far beyond our power to pay. 

I do not look upon Memorial Day as a day of mourning. 

I think our flags should be hoisted to the top of the staff" as a 

signal for rejoicing that our beloved dead were willing to fight 

and die for what they considered their duty. Time has so 

36~ 



MEMORIAL DAY ADDRESS 353 

softened the spirit of the living that to-day they give full 
credit to a gallant enemy which opposed them, and unite with 
them in decorating the graves of brave men whose ideas of 
duty differed, and who fought each other to the death. 

In olden days a soldier wearing the iron cross commanded 
respect, and those high in authority uncovered as they passed 
him. To-day a man whose record entitles him to membership 
in the Grand Army of the Republic is not respected fully in 
accordance with his merits. Some of the time which has been 
spent in pleasure to-day might more profitably have been spent 
in contemplation of the glorious results that have been brought 
about by the honored dead and their aged survivors who fought 
the good fight and then joined their great Commander in his 
epigrammatic expression, " Let us have peace." 

I trust that in the near future all civilized nations on the 
face of the globe will look upon warfare as a crime, and that 
all questions will be submitted to a peace congress to be de- 
cided by arbitration, as all questions of a similar nature are 
between individuals. 

The world is full of honest, capable men who are worthy 
and competent of membership in such a congress. No war 
ever definitely decides as to the right or wrong of the original 
cause of dispute, and very often might wins and right loses. 

That your cause was right and just in 1861 is now acknowl- 
edged by many who fought on the other side. 

It will be many years before the boys in America can be 
convinced that peace by arbitration is more to be desired than 
war. You and others who performed deeds of valor are demi- 
gods to them. The warriors in history and romance are their 
ideals in life. You, who realize how right Sherman was when 
he said " War is hell," may well act as apostles for peace with 
honor. 

However, if war with any foreign nation should come, the 
story of your hardships and suffering would not deter a million 
of our young men from enlisting. The glory of your deeds 
would act as a stimulant and they would tread the path of 
suffering and laugh at death as you did. 



354 MEMORIAL DAY ADDRESS 

During the past month the honor of becoming an associate 
member of the Grand Army of the Republic has been con- 
ferred upon me, so I speak to you to-night as I would to com- 
rades. It is true that I never wore the uniform of blue, but I 
did serve my country in financing the needs of the Nation at 
a time when funds were low and confidence was shaken. Lin- 
coln, Grant, Sherman, McClellan, Chase, Seward and Sum- 
ner were personal friends of mine. Sickles is still my friend, 
and is the only surviving Corps Commander. All these men 
have their deeds recorded on the pages of history. We rev- 
erence their memory. The private who lies buried in an un- 
known grave deserves equal credit. He did his level best, and 
gave his life for his country. The monuments erected to the 
memory of the unknown dead are the ones which should be 
hung with the choicest garlands on Memorial Day. 

After listening to the address of General Loud last year, 
and again to-day, I feel like exclaiming, " I am no orator as 
Brutus is, but a plain blunt man." It is seldom that a soldier 
has been heard who is able so eloquently to express himself, 
and I wish that his words could reach the ears of all the people 
of the land. The tribute that he pays to the dead comes from 
one who walked with many of them " through the valley of 
the shadow of death." He is a man of deeds, and a man of 
words, and I pay him my highest respect as a master of both. 
When the sad time comes for him to be laid at rest, the world 
will say, A man is dead! 

While doing honor to the veterans we are apt to forget 
those who are entitled to still greater honor. I refer to 
the widows and mothers of those who fell. The tale of 
their deprivation and suffering is very little heard or known 
in these later days. There are thousands of good women 
still living who, up to the time of the Civil War, were well 
taken care of, and who enjoyed the luxuries of life. They 
girded the armor on their loved ones, and sent them forth to 
do or die for the cause. Death robbed them of their support, 
and although the country has been liberal in the payment of 
pensions, the amount that most of these good women have 



MEMORIAL DAY ADDRESS 355 

received is but a pittance in comparison with what the dead 
would have earned could they have lived. Many of them 
have known nothing but sorrow and comparative poverty in the 
years since they were bereaved. To-night I want to impress 
upon you the great debt the present generation owes to these 
noble women. I know of no more fitting close to this day's 
exercises than words of gratitude to those who gave silently and 
tearfully all that was dear to them. No wonder the United 
States is the greatest nation in the world when its citizens 
have been born of such parentage ! 

While the War did not produce heroines of the type of Joan 
of Arc, heroines of the type of Florence Nightingale were 
numerous, for the hospitals were filled with brave nurses who 
risked life and health for the comfort and relief of the sick 
and wounded. I hope I may live to see a monument erected 
to the memory of the women who served their country with no 
thought of glory or reward. 



PRINCE AND PRINCESS FUSHIMI 

LUNCHEON IN HONOR OF PRINCE AND PRINCESS HIROYASU FUSHIMI 
AT THE RESIDENCE OF THE AUTHOR, 27 WEST 51 ST STREET, NEW 
YORK, ON JUNE 5, 1910. 



A TOAST AND SOME WORDS OF GREETING. 

THE dynasty of Japan is the oldest in the world, and the 
present Emperor represents the continuous reign of one 
family during that dynasty's entire existence. I ask you 
to drink to the health of " the survival of the fittest " of the mon- 
archs of the world, His Majesty the Emperor of Japan; and it 
is fitting that this toast should be drunk in an old and rare wine 
somewhat commensurate in age to that long period of time. 
Your glasses contain Madeira which I have had in my cellars for 
•10 years, and it was 65 years old when I became its possessor, 
making it 105 years old. No other but wine of the rarest vin- 
tage could have survived so long. So the ruling family of Japan 
by reason of its wonderful ability has for centuries maintained 
its ascendancy, and I hope its reign will continue always. 

But a comparatively few years ago we celebrated the centen- 
nial birthday of our Nation. Last year we celebrated the three 
hundredth anniversary of the discovery of the Hudson River. 
In 1913 we hope to have a world's fair in Manhattan to cele- 
brate the three hundredth anniversary of the settlement of this 
Island by the Dutch. 

We begin to think that we are an old nation, and a still older 
town. But, when we contemplate that for thousands of years 
before the discovery of this Continent, Japan was a nation, and 
356 



PRINCE AND PRINCESS FUSHIMI 357 

the present dynasty were the rulers in that country, it seems as 
though we are still too young to even speak of our age. 

To-day we, as private citizens of the youngest of the great 
nations, heartily extend to the Prince and Princess Fushimi 
(who represent one of our older sisters) our most cordial and 
esteemed friendship and respect. 

We trust that their visit to this country will assure them that 
our countrymen look upon their great nation as an ally in prog- 
ress and a friendly rival in all that tends to advance the best 
interests of the world at large. 

We are honored by their presence, and hope that when they 
leave us it will be with as much regret to them as to us. 



THE MONROE DOCTRINE, AND THE INTERVEN- 
TION OF THE UNITED STATES IN BEHALF OF 
MEXICO 

The Emperor Napoleon III of France in 1864 made a bold attempt 
to capture Mexico, in open defiance of the Monroe Doctrine. Senor 
Romero, the then Mexican Minister, was invited to a public dinner 
in New York, in order that the situation might be discussed, and 
with a view of preventing foreign intrusion, which was only the 
entering wedge for future invasion of our sister Republic, at a time 
when our nation was engaged in a deadly struggle for its very exist- 
ence. The dinner took place on the evening of March 29, 1864, at 
Delmonico's, then at Fifth Ave. and Fourteenth Street. The Commit- 
tee of Invitation comprised: 

William C. Bryant, W. Butler Duncan, C. A. Bristed, 
William H. Aspinwall, William Curtis Noyes, Alexander Van Rens- 
Hamilton Fish, Henry Clews, selaer, 

John W. Hamersley, Frederick C. Gebhard, George Folsom, 

James T. Brady, 

George T. Strong, 

Henry Delafield, 

Henry E. Pierrepont, 

George Opdyke, 

David Dudley Field, 



Jonathan Sturges, 

James W. Beekman 

J. J. Astor, 

Smith Clift, 

W. E. Dodge, 

David Hoadley, 

Frederick De Peyster, George Bancroft, 



Washington Hunt, 
Charles King, 
Willard Parker, 
Adrian Iselin, 
Robert J. Livingston, 
Samuel B. Ruggles. 



Hon. James W. Beekman presided. The stewards were John Jacob 
Astor, John W. Hamersley and Henry Clews. 

Brilliant speeches were made by His Excellency Senor Matias 
Romero, the honored guest of the evening, and Hon. David Dudley 
Field, Mr. Charles King, then President of Columbia College, Mr. 
George Bancroft, the eminent historian, Mr. William Cullen Bryant, 
Dr. Willard Parker, Mr. Frederick De Peyster, Mr. William E. Dodge, 
Mr. John W. Hamersley, and others, and the writer was introduced 
by the Chairman in these words: "We must not permit the modesty 
of our banker and steward, Mr. Clews, to outweigh our desire to hear 
from the Bourse." 

358 



THE MONROE DOCTRINE 359 

^ 4]\ /f R - PRESIDENT and Gentlemen — Enough has 
^y I already been said, in the speeches made this 
•^ -*■ evening, to indicate most conclusively the depth 
of sympathy which pervades this community in behalf of the 
cause of Mexico, and I rise to express my cordial concurrence 
with the sentiments which have been avowed. 

" The unanimous and determined voices of this company 
clearly show that public opinion in this country will not sub- 
mit to the encroachments of foreign powers upon any portion 
of the territory of the continent. 

" The principles of free republican government are so 
strongly implanted in the hearts of the people both of Mexico 
and the United States, that they will never consent to surrender 
them. 

" Human freedom and the rights of man make common cause 
between Mexico and all other American States. 

"I do not utter these words in prejudice against any gov- 
ernment. In my judgment, European nations will best pro- 
mote the welfare of their own people by carefully abstaining 
from all interference with the declared will of those who dwell 
on this continent. 

" The doctrine has been solemnly asserted, and will be main- 
tained inviolate against all alliances which seek to impede the 
progress of liberal institutions, or to impair the strength of gov- 
ernments founded on the rights and intelligence of the people. 

" This is the doctrine of the United States, and, under the 
shield of its power and influence, the safety, prosperity and 
independence of Mexico will be maintained and made per- 
petual." 

To show the animus of the Emperor regarding this meeting, 
and how closely he was watching the struggle, I may state that 
when the New York Herald, which had a full account of the 
meeting, arrived in Paris it was promptly seized by Napoleon's 
censors and was committed to the flames on account of the 
speeches made by some of our representative men. It will be 
seen by reference to this incident that our representative busi- 



360 THE MONROE DOCTRINE 

ness men in Wall Street were among the first to perceive this 
threatened danger to the nation, and that they manifested their 
business tact and capacity in promptly meeting it. They acted 
literally on the maxim of Sir Boyle Roche, that " the best way 
to shun danger is to meet it half way." 



ENGLAND'S NEUTRALITY IN OUR CIVIL WAR 

THE recent celebration of the Centenary of William E. 
Gladstone's birth, has again raised the question of 
England's attitude towards the North in the great con- 
flict of 1861-65, Gladstone having been a member of the British 
Cabinet under Lord Palmerston's premiership, during that 
period. The following article from The New York Evening 
Post, of December 28th, 1909, fully answers those who still 
insist that Queen Victoria's Government was secretly in favor 
of the disruption of the Union, at the time that Abraham Lin- 
coln was struggling to save it : — 

"GLADSTONE WAS NEUTRAL 
Denied in a Letter that He Favored the South. 

henry clews produces communication addressed to him, 

in which famous statesman told of cabinet secrets 

rejected immediately the proposition of napoleon iii. 

" Apropos of Ambassador Bryce's speech at Carnegie Hall 
this evening, in observance of the one hundredth anniversary of 
the birth of Gladstone, Henry Clews showed to-day a letter from 
the famous statesman to Mr. Clews, written in 1889, and relat- 
ing to the attitude of England toward the North during the 
civil war. Mr. Gladstone says: 

No. 26 James St. 
May 30, 1889. 
Dear Sir: Having expressed my interest in the portions of your 
work which I read on the day of its arrival, I think I would be less 
than ingenuous if I did not, after reading what relates to the cabinet 
of Lord Palmerston, in p. 56 and in the following chapter, make 
some reference to it. 

361 



362 ENGLAND'S NEUTRALITY 

Allow me to assure you that, so far as the cabinet is concerned, 
you have been entirely misled in regard to matters of fact. As a 
member of it, and now nearly its sole surviving member, I can state 
that it never at any time dealt with the subject of recognizing the 
Southern States in your great civil war, excepting when it learned 
the proposition of the Emperor Napoleon III, and declined to enter- 
tain that proposition, without qualification, hesitation, delay, or dis- 
sent. 

In the debate which took place on Mr. Roebuck's proposal for the 
recognition, Lord Russel took no part, and could take none, as he 
was a member of the House of Lords. J spoke for the cabinet. 

You will I am sure be glad to learn that there is no foundation for 
a charge, which, had it been true, might have aided in keeping alive 
angry sentiments happily gone by. You are of course at liberty to 
publish this letter. 

To your reference in p. 70 as a record of impressions which I was 
not at liberty to use, I can'make no objection; though you are prob- 
ably aware that they were many years ago the subject of a detailed 
explanation from me to the American government, and of a most 
handsome reply from Mr. Hamilton Fish. 
I remain, dear sir, 

Your very faithful servant, 

H. Clews, Esq. W. E. Gladstone. 

" The original of this document was to be seen to-day in Mr. 
Clews's office. It holds a unique position among documents, 
as the only thing in writing which had any bearing on the 
attitude of the English cabinet at the time of the war. There 
is an unwritten law in England that the proceedings of the 
cabinet shall be kept absolutely secret even to the smallest 
detail, unless the consent of the sovereign be given to make 
them public. This letter, therefore, is not only an official an- 
nouncement of the position of the cabinet, but is also sound 
evidence of the attitude of the Queen toward the United States. 

" Mr. Gladstone was most punctilious in all matters of polit- 
ical etiquette, and, indeed, so strong is the unwritten law al- 
ready mentioned, that even his position would have been in 
danger had this proceeding of the cabinet been disclosed with- 
out proper authority. 



ENGLAND'S NEUTRALITY 363 

" The proposal of Napoleon III, to which this letter refers, 
was only part of his great scheme to invade the Southern 
States from Mexico, which was then sheltering his troops. Mr. 
Clews, in to-day's interview, dwelt on the importance of the 
unanimous refusal of England to entertain this proposal. The 
recognition of the South by both England and France would 
have meant ruin to the cause of the North. 

" The idea of Mr. Gladstone's leaning to the side of the South 
was based solely, it seems, on a speech which he made in York- 
shire in 1862, and which was unfortunately, though truthfully, 
worded. In this speech he said that Jeff Davis had made an 
army, a navy, and a nation. The word " nation " stuck. They 
took it to be a recognition of the independence of the South, 
rather than a mere statement of fact. What he meant was that 
Jeff Davis had created a nation and one which remained a 
nation until the termination of the war." 

Supplementally, the appended extract from The Springfield 
Daily Republican of December 29th, 1909? further shows the 
extreme importance of this utterance of Gladstone's, in the 
opinion of a competent critic : — 

It is interesting, in this matter, that on the eve of the New York 
celebration in Carnegie hall of his centenary, whereat Embassador 
Bryce spoke, Henry Clews should have made public a letter from 
Mr. Gladstone written to him on the subject of the attitude of Eng- 
land toward the North in that war. This letter is out of the common, 
as relating to the sentiments and the actual proceedings of a British 
cabinet, which are matters of secrecy. The letter, referring to Mr. 
Clews's book of " Recollections," is given in the New York Evening 
Post and is as interesting as anything could be on this occasion. 

I attended the Carnegie Hall meeting, and, in one of the 
smaller rooms of the building I had the honor of exhibiting the 
original of the Gladstone letter to some of the notable men 
there present, amongst them Ambassador Bryce himself, who, 
after an attentive perusal of the document, said : " And every 
bit of it is true ! " 

Mr. Bryce is high authority on all matters of British states- 



364, ENGLAND'S NEUTRALITY 

manship, for he was once a member of Mr. Gladstone's Cabinet 
and was associated intimately with that great statesman in 
various lines of endeavour, political, social and literary, — and 
is, moreover, thoroughly informed on the workings of British 
governmental policies — past and present. 



OUR RAILROAD METHODS 

Delivered at Mr. H. C. Bowen's Annual Symposium at Wood- 
stock, Conn., July 4, 1872. Some of the reforms suggested in this 
address, delivered 37 years ago, are now embodied in remedial legis- 
lation enacted by Congress, and various State Legislatures; and the 
Interstate Commerce Commission and different public service com- 
missions of a later date have also been instrumental in removing some 
of the evils referred to. 

IN the whole range of our law-making there is no one 
branch in which there has been such an utter lack of 
judgment, foresight and just regard for the rights of 
the citizen, as in the legislation provided for our railroads and 
railroad companies. For the most part, the statutes relating 
to this class of corporations are a set of general enactments, 
loosely defining the large powers granted to the incorporators, 
comparatively silent on the duties and obligations of the com- 
panies to the public, and conferring upon them a virtual carte 
blanche as to their methods of finance and of conducting their 
business. 

In a country whose products are mainly bulky, and have to be 
carried to markets hundreds or thousands of miles distant, it is 
of the first moment that its railroads should be built with the 
strictest economy and on the lowest possible capitalization. 
The low cost of land and the cheapness of material for road-bed 
are especially favorable to our securing this advantage; but the 
laws have permitted a system of inflated financiering which 
neutralizes these natural adaptations and immensely increases 
the cost of transportation. 

As railroads have to be largely built with borrowed money, 

their construction in this country afforded an opportunity for 

establishing credit relations with the great lending centres of 

Europe, which might have been of incalculable value in promot- 

365 



366 OUR RAILROAD METHODS 

ing the development of our vast resources in various directions. 
England, Holland, and Germany have indeed loaned us very 
large amounts for railroad enterprises ; but the law has permit- 
ted these undertakings to be conducted with so much conceal- 
ment, misrepresentation and actual fraud, and has so disre- 
garded the rights of the bondholders, that American credit has 
become a scandal and a by-word on the European bourses. The 
result is, that foreign capitalists are seeking other fields of 
investment; and their respective Governments are encouraging 
them by opening up new colonies, and thus getting fresh 
sources for the supply of products which otherwise would have 
continued to be readily taken from the United States. Such 
are the rewards of immoral financiering; and these bad methods 
are directly traceable to the encouragements afforded by our 
negligently constructed railroad laws. 

Perhaps I may best succeed in making myself understood 
on this subject by illustrating the way in which our railroads 
are usually built. Under the laws of the State of New York 
— which are a fair sample of the laws of most other States — 
a number of persons form a company under the general rail- 
road laws, registering at Albany the proposed route of the road, 
the amount of capital stock and bonds to be issued, and a few 
other particulars required in the papers of incorporation. The 
incorporators then proceed to form themselves into a syndicate 
or company, for the purpose of contracting to build and equip 
the road. Here comes the first step in the system of " crooked " 
financiering. In their capacity of incorporators, the same men 
make a contract with themselves, in the capacity of constructors. 
Of course, they do not fail to make a bargain to suit their own 
interests. They would be more than human if they did. Usu- 
ally the bargain is that the construction company undertakes 
to build the road for 80 to 100 per cent, of the face value of 
the first mortgage bonds, with an equal amount of stock, and 
sometimes also a certain amount of second mortgages thrown 
in, virtually without consideration. The first mortgages are 
supposed to represent the real cash outlay on the construction 
and equipment; but, as a matter of fact, the true cash cost 



OUR RAILROAD METHODS 367 

of the work done and materials furnished ranges from 60 to 
80 per cent, of the amount of first lien transferred to the con- 
structors. The Construction Company disposes of the bonds, 
partly by negotiating their sale to the public through bankers, 
at an advance upon the valuation at which they had received 
them, and partly by using them in payment for rails and equip- 
ment. Beyond the profits made from building the road for 
the first mortgage bonds, there remains in the hands of the 
constructors the entire capital stock and any second mortgage 
bonds they may have received, as a clear bonus, to be held for 
future appreciation, and to keep control of the Company and 
be ultimately sold on a market deftly manipulated for that 
purpose. 

This is the way in which a large majority of our railroads 
have been and others are still being constructed. It will thus 
be seen that the actual cash cost of a railroad is ordinarily 
less than 50 per cent, of the stock and bonds issued against 
the property, and that its first mortgage exceeds the amount 
of the legitimate actual cost of the road. 

The basis of all the discredit, the embarrassments, the bank- 
ruptcies and the robberies of our railroad system is thus laid 
at the inception of the enterprises. They rest upon an in- 
trinsically rotten and dishonest foundation; and the evil is far 
from having reached the end of its mischief to the financial, 
political and social interests of the country. In some few cases, 
railroads thus exorbitantly capitalized have proved able to 
earn the interest on their debt, provide for additional outlays 
on construction and betterments, and even pay dividends on 
their stock; but, in a large majority of cases, they have had to 
undergo a process of financial reconstruction, in order to bring 
the debts of the Company within its ability to meet its fixed 
charges. It is not a risky estimate to suppose that of our pres- 
ent 125,000 miles of railroad, with its $7,500,000,000 of stock 
and debts, 60 per cent, has undergone this process of debt- 
scaling and rehabilitation. Were it not that the new roads have 
opened up new country for settlement, which has become an im- 
mediate source of traffic, these bad financial results would have 



368 OUR RAILROAD METHODS 

been more general and worse than they have proved to be. The 
risks attending the building of lines into unsettled regions 
ought to have been a reason why they should be constructed 
on conservative principles; but, in reality, the prospects of set- 
tling new populations and of tapping new sources of wealth, 
have been so magnified to the eyes of distant and credulous 
lenders as to enable the speculative constructors to easily con- 
summate their illegitimate schemes. 

The general result of this system of financiering has been 
to deprive the legitimate original investors of their chances of 
making a fair return out of their investment. As a rule, the 
bondholders have provided all the capital expended, and the 
stockholders have invested nothing. The bondholders incur all 
the risks; the stockholders have no responsibilities. If the 
enterprise proves a success the bondholders get their interest, 
while the stockholders, without a dollar of original outlay, get 
vastly more than ever falls to the mortgage creditors through 
the stock becoming an instrument of profitable speculation. If 
the enterprise is a failure, the bondholder has to forego inter- 
est and finally to accept a new mortgage for a less amount and 
at a lower rate of interest; whilst the original stockholder has, 
in the meantime, made money out of artificially " booming " 
the shares in Wall Street. 

The profits realized on these speculative constructions are 
enormous, and have constituted the chief source of the phe- 
nomenal fortunes piled up by our railroad millionaires within 
the last twenty years. It is no exaggeration to characterize 
these transactions as direct frauds upon the public. They 
may not be such in a sense recognized by the law, for legisla- 
tion has strangely neglected to provide against their perpetra- 
tion; but, morally, they are nothing less, for they are essen- 
tially deceptive and unjust, and involve an oppressive taxation 
of the public at large for the benefit of a few individuals, who 
have given no equivalent for what they get. The result of 
this system is that, on an average, the railroads of the country 
are capitalized at probably fully 50 per cent, in excess of their 
actual cost. The managers of the roads claim the right to earn 



OUR RAILROAD METHODS 369 

dividends upon this fictitious capital, and it is their constant 
effort to accomplish that object. So far as they succeed, they 
exercise an utterly unjust taxation upon the public, by exacting 
a compensation in excess of a fair return upon the capital ac- 
tually invested. This unjust exaction amounts to a direct 
charge and burden on the trade of the country, which limits 
the ability of the American producer and merchant to com- 
pete with those of foreign nations, and checks the development 
of our vast natural resources. In a country of " magnificent 
distances," like ours, the cost of transportation is one of the 
foremost factors affecting its capacity for progress; and the 
artificial enhancement of freight and passenger rates due to 
this false capitalization has been a far more serious bar to 
our material development than public opinion has yet realized. 
The hundreds of millions of wealth so suddenly accumulated 
by our railroad monarchs is the measure of this iniquitous tax- 
ation, this perverted distribution of wealth. 

This creation of a powerful aristocracy of wealth, which 
originated in a diseased system of finance, must ultimately be- 
come a source of very serious social and political disorder. 
The descendants of the mushroom millionaires of the present 
generation will consolidate into a broad and almost omnipotent 
money power, whose sympathies and influence will conflict with 
our political institutions at every point of contact. They will 
exercise a vast control over the larger organizations and move- 
ments of capital; monopolies will seek protection under 
their wing; and, by the ascendancy which wealth always con- 
fers, they will steadily broaden their grasp upon the legislation, 
the banking and the commerce of the nation. 

The illegitimate methods by which the wealth of this class 
has been accumulated cannot always remain a mystery to the 
masses. The time will come when every citizen will clearly 
perceive how his interests have been sacrificed for the creation 
of this abnormal class; and, when that time comes, a series of 
public questions will arise that will strain our political institu- 
tions to their very foundations. Already the working masses 
begin to see the dim outline of the gigantic wrong that has 



370 OUR RAILROAD METHODS 

been inflicted upon them in common with all other classes. If 
they do not understand the exact method by which a portion 
of the rewards of labor has thus been diverted from them, they 
clearly comprehend which is the class responsible. The labor 
troubles that have so seriously shaken confidence during the 
Spring of this year (1872) have been largely stimulated by an 
idea that a serious wrong has been done to the workman in the 
creation of these abnormal fortunes. It is not surprising — al- 
though it may lead to disappointing results — if workingmen 
should reason that, if railroads can aiford to make a few men so 
wonderfully rich, they can afford to pay their employees higher 
wages for shorter hours. Nor can we wonder if, when 
capitalists are on every hand piling up their wealth by the 
tens of millions, the laborer should conclude that he ought to 
be able to get a few dollars a week more, or deduct an hour or 
two off his day's work, without very seriously hurting the em- 
ploying class. This may be and is very fallacious reasoning; 
but it is what might very naturally be expected under these 
circumstances, from a class who are not trained to think beyond 
surface depth. It will be of no avail to tell the workmen that 
this unjust distribution of wealth is final and irrevocable; that 
there is no power of redress by which a wrong of this nature 
can be righted; or that, as voting citizens, they are as much 
responsible as anybody else for permitting the neglects and 
defects of legislation that have made these inequalities possible. 
This class never reason either calmly or logically, and it will 
take a great deal of fruitless agitation to satisfy them of the 
hopelessness of their methods of seeking reparation. 

The Socialistic seductions which have captivated such large 
masses of the working population of Europe will all the more 
readily find acceptance among our millions of laborers because 
they have before their eyes such conspicuous instances of the 
unequal division of wealth and of the overwhelming power of 
organized capital. Certainly, if any facts could be supposed 
to justify the doctrines of Socialism and Communism, it would 
be the sudden creation of such fortunes as those which, within 
a very few years, have come into the hands of our railroad mag- 



OUR RAILROAD METHODS 371 

nates. A few years later, the public will understand much bet- 
ter than it now does how facts like these have contributed to 
the raising of questions of government which will dangerously 
test the cohesion and endurance of our political institutions. 

Artificial methods of establishing our railroad corporations 
have naturally led to artificial methods of regulating their op- 
erations. Over-capitalization incapacitates the roads for com- 
petition; for it necessarily holds out a temptation to parallel 
existing roads by others at a lower capitalization. As roads 
running between the same points were multiplied, competition 
for " through " business became more active, until not only 
were dividends threatened on some of the best lines, but some 
roads were driven into default on their mortgages. At this 
point the " pool " was introduced — a device by which all lines 
running between the same points agree to put their business 
from through traffic into a common aggregate, to be distributed 
among the several members according to certain accepted per- 
centages. It was hoped that, in this way, uniformity of charges 
could be maintained, at such rates as were necessary to make 
the business satisfactory to each member. This, however, was 
soon found to be a step " from the mud into the mire." The 
pool was discovered to operate as a premium on the construc- 
tion of new parallels. 

Speculators were quick to perceive that they could build new 
lines on the same routes for much less cost than the old ones, 
and that, with a lower capitalization, they could easily compel 
the pool to admit them to membership, with all the privileges 
of a ready-made traffic and with all the guarantees the pool 
could afford of exemption from competition, and of ample 
charges. Thus, the pools that, in the first instance, were made 
necessary through the evils of speculative methods of con- 
struction, became, in turn, the source of a new and even worse 
form of the same evil. New roads were built, or sets of old 
detached ones were connected, so as to afford additional paral- 
lels to the existing trunk lines, with no other object than to 
compel the latter to support them by dividing with them a por- 
tion of their traffic, or to accept the alternative of a reckless 



372 OUR RAILROAD METHODS 

cutting down of rates. The end to this viciously excessive 
system of construction can only come when the pools have 
been reduced to such a low condition that they will no longer 
care to take newcomers into their copartnership; in which 
case speculative builders will see no chance for profit in such 
ventures. The fate of the " Nickel Plate " and of the. West 
Shore speculations, by which nearly 1,000 miles of needless road 
were built to divide traffic with the Vanderbilt system, serves 
as a warning against the danger of building roads to live upon 
pool support; but, nevertheless, the Eastern trunk pool still 
stands exposed to a great deal of harassing outside competi- 
tion from possible and contemplated new combinations of ex- 
isting detached links. Routes of the latter kind are even more 
formidable competitors than new lines, because they can be 
provided at a lower capitalization, and have already the sup- 
port of an established way traffic. It would not be surprising 
if, within the next three or four years, several new routes should 
in this way be established between New York and Chicago. 

It will thus be seen that the very contrivance intended to 
stave off the vicious effects of artificial capitalization is con- 
tributing, by a sort of punitive process, towards the end of 
reducing earnings to a just ratio to the true value of the prop- 
erties. The weakness of the pool, arising from its temptations 
to new competitors to enter the field, is not the only cause 
of its failure. Up to this time it has been impossible to find 
a form of pool stringent enough to restrain the members from 
cutting rates against each other. The modes of possible eva- 
sion are so numerous, the sacrifices of special advantages that 
each member has to make are so galling, the small share that 
remains to each road in a numerously divided business is so 
small, and the temptations of agents to get freight " by hook 
or by crook," in dull times are so irresistible, that the strictest 
watching and the severest penalties fail to secure a faithful ob- 
servance of the pool agreements. Much forbearance is shown 
towards transgressions, and deliberate violations have to be 
condoned or connived at; but, all the time, the pools are in 
imminent danger of jealousies and breaches of faith causing 



OUR RAILROAD METHODS 373 

their disruption. No sooner have they won public confidence 
by maintaining harmony through a period of prosperous busi- 
ness, than the public wake up to find that some member has 
been secretly " cutting," and the agreements are torn to pieces. 
The result is, that the public have lost all confidence in the 
ability of the pool to regulate competition; and, still worse 
for the railroads, their managers are losing faith in them also. 
The great crucial test of this expedient, so far as respects the 
Eastern lines, is likely to come when the number of smaller 
outside competitors, of the character just alluded to, comes to 
be increased. The pool will not be likely to admit them into 
its fold, which already includes too many diverse interests to 
permit of harmony; and if it did, the danger of disagreements 
and disruption would be only thereby increased. And yet, if 
those routes are shut out, they will act as so many free lances, 
attacking the older lines in every direction, and doing business 
at rates which will leave the pool companies no alternative but to 
follow suit. In this dilemma, the outlook for some time ahead 
is not an encouraging one for the older companies. To my 
view, it seems very probable that their original sins of con- 
struction and their subsequent transgressions of stock " water- 
ing " are about to find them out. The natural law of competi- 
tion is a terrible foe to the violators of commercial justice. It 
is the inevitable police power of trade. Its working may be 
evaded for a time ; its final conquest over wrongs and monopolies 
may sometimes be delayed beyond the limits of human patience, 
and men may at such times lose confidence in its power to right 
the wrongs of society; but its ultimate success in the restora- 
tion of equity and fairplay is as certain as the rising of the sun. 
My absolute confidence in the ultimate triumph of this prin- 
ciple prompts me to venture the assertion that, at no very 
distant period, the wrongs practised in the original construc- 
tion of our railroads, and in the subsequent " watering " of 
their stocks, will be compensated through competition adjusting 
the profits of the companies to the equivalent of a fair return 
upon a true valuation of the properties; that is, a value meas- 



374 OUR RAILROAD METHODS 

ured by what they are able to earn under the conditions of free 
competition and the now current cash cost of providing like 
facilities. That, it appears to me, is the solution towards 
which our railroad problem is now steadily working ; and neither 
Congressional legislation, nor State regulation, nor the re- 
sistance of organized capital, can be expected much longer to 
stave off that result. 

It may, however, be very properly asked, whether legislation 
has no duty in the premises? To me, it appears that it has a 
very weighty one. The consequences of the original neglect to 
prescribe proper regulations for the construction, capitalization 
and financial management of railroads have been so fully ex- 
posed by their past history, that the legislatures will greatly err 
if they neglect to impose restrictions upon future corporations 
that will prevent further repetition or perpetuation of the evils. 
When the Government bestows upon railroads important privi- 
leges and franchises, under which fundamental private rights 
are held in abeyance for the common good, it is due to the 
public protection that the recipients of these favors should be 
held under restrictions which will prevent them from abusing 
these privileges to the public disadvantage. 

When a railroad company capitalizes its property at double 
its actual cost, and seeks to collect charges calculated to yield 
dividends upon such false capital, it grossly perverts and 
abuses the privileges conferred by its charter, and virtually per- 
petrates a public robbery. This appears to be a perfectly plain 
proposition, and yet this glaring wrong has been so long 
tolerated that not only the railroads, but a portion of the public 
even, have come to regard it as a sort of right inherent in these 
corporations. One of the first duties of the State Legislatures, 
therefore, is to enact laws requiring that the stocks and bonds 
issued against any railroad hereafter built shall, in no case, 
exceed in the aggregate the true cash cost of the property ; the 
penalty for the violation of this restriction to be forfeiture of 
charter. The responsibility of managers should be definitely 
fixed. All extensions, betterments or improvements should be 



OUR RAILROAD METHODS 375 

provided for by issues of stock or bonds on like conditions. 
The issue of mortgages should be restricted within 60 per cent, 
of the true cost of the property. 

In order to prevent wrongful speculative profits being real- 
ized by the incorporators, they should be prevented from be- 
coming the constructors of their road, directly or indirectly; 
and all contracts for construction, equipment, extensions or 
improvements should be made upon open competitive bids, the 
lowest bid to be accepted, with substantial guarantees for the 
faithful performance of the contract. Also, it should be made 
the duty of a board of State railroad commissioners to see to 
it that all these conditions are strictly complied with. Regula- 
tions should be provided prohibiting issues of stock for any 
other than construction or equipment purposes, forbidding the 
payment of dividends not actually earned, and enforcing the 
amplest publicity of details relating to current traffic and the 
financial affairs of the companies. 

Had our original railroad laws incorporated provisions of this 
character, our railroads would have all along ranked as the 
safest and most stable investments of the country; the dis- 
credit that hangs over our corporate enterprises would have 
been averted; transportation would have been done at lower 
rates with steadier charges, and we should have been saved the 
social and political excrescence of an aristocracy based upon ill- 
gotten wealth. After our bitter experience of the dangerous 
results of neglecting to guard the railroad interest by some such 
restraints as the foregoing, it surely is not too early now to 
apply these safer methods to all future enterprises of this char- 
acter. Not only is such legislation due as a measure necessary 
for the protection of our commerce and investors, but it would 
go very far towards remedying the evils that have grown up 
under the old and badly regulated system. To a man of busi- 
ness it is hardly necessary to point out what would be the com- 
petitive advantages of roads constructed under the proposed 
regulations. As a rule, their capitalization would not exceed 
50 to 60 per cent, of that of the older companies, and they 
could, therefore, be run upon a much lower rate of charges. 



376 OUR RAILROAD METHODS 

The thoroughly conservative nature of their organization 
would bespeak for them a degree of public confidence which 
would enable them to get all the capital needed for really le- 
gitimate undertakings, whilst purely speculative ventures would 
be put under conservative check. Under these circumstances 
new roads could do a profitable business, and yet compete dis- 
astrously with the old excessively capitalized companies. The 
ultimate result of this competition from the new order of roads 
would inevitably be to reduce the earnings of the older class 
to a point which would admit of interest and dividends being 
earned only on the same rate of capitalization as existed among 
the new-system companies. In other words, the effect of the 
honest method of capitalization here suggested would be to 
squeeze all the " water " out of the old companies, and to bring 
them in effect, though, possibly not in form, to the same finan- 
cial level as the new. 

If my reasoning here is correct, there is cause for our great 
railroad capitalists to look out for the security of their in- 
vestments. The basis for their wealth may prove far less cer- 
tain than they have imagined it to be. With the prevailing 
and steadily increasing public feeling against the methods of 
railroad capitalists and the working of our railroad system, 
what assurance can there be that, when a remedy for these cor- 
porate wrongs comes to be clearly propounded, it will not be 
eagerly urged upon the attention of the legislatures and adopted 
without much ceremony? The dash of a Governor's pen is, 
therefore, all that stands between the railroad millionaire and 
the sudden extinction of a large portion of his inflated paper 
wealth. Is this a chimerical conclusion? The question, it 
seems to me, deserves a far more serious consideration than 
those most vitally concerned have yet bestowed upon it. No 
man can confidently deny the possibility of such a result as is 
here indicated. No one familiar with the present public tem- 
per on the subject of railroad monopoly can reasonably ques- 
tion the probability even of a settlement of this kind being ere 
long resorted to. Under these circumstances, it is a question 
very pertinent to the times, whether the foundation of our rail- 



OUR RAILROAD METHODS 377 

road aristocracy is as broad or as firm as it has been supposed 
to be, and whether a healthy solution of the great railroad 
problem is as difficult and as remote as some despondent peo- 
ple have represented it to be." 



ESSAYS 



JAPAN VERSUS RUSSIA — A PERSONAL VIEW OF A 
WONDERFUL ORIENTAL DEVELOPMENT 

Contributed to " Harper's Weekly," July 16, 1904. 

THE Russo-Japanese war has been full of surprises, and 
has given rise to a vast amount of discussion as to its 
influence and consequences and the relations of the rest 
of the world to the two contending nations. It has therefore 
been a great international educator, all the more so because 
the strife has been so swift and deadly. 

It has exposed the astonishing inefficiency and weakness of 
both the army and navy of Russia, that before were dreaded by 
other powers, and has shown the superior strength, mobility, and 
military and naval skill and pushing force of Japan. One re- 
sult is that the prestige of Russia, both on sea and land, has 
suffered very severely, so severely that it will probably never 
be fully regained. 

On the other hand, the prestige which Japan gained in its 
war with China has been immensely increased. We see a reflec- 
tion of it in the avidity with which its ten million sterling loan 
was recently taken, both in New York and London, half being 
allotted to each city. The amount, equivalent to fifty millions 
of dollars, was many times oversubscribed. 

The great success of this loan was a practical pledge of in- 
ternational amity between the three countries concerned — Eng- 
land, America, and Japan — for there is a tie of interest estab- 
lished between a country that sells its bonds and the countries 
to which it sells them. Therefore, the larger our holdings of 
Japanese bonds become the more we shall be interested in the 
welfare of Japan, and other conditions being equal, the more 
friendly and obligated Japan will feel towards us. 

Consequently, our investments in her securities will be pro- 
381 



382 JAPAN AND RUSSIA 

ductive of international good feeling. They will thus tend to 
stimulate our trade with Japan, as well as to induce Japanese 
investments in this country, for we are geographically nearer 
than Europe to her open door. 

The fact that our sympathies are with Japan in her contest 
with Russia is very largely due to the liberal and progressive 
open-door policy of Japan and the narrow, restricted, and mo- 
nopolistic shut-door policy of Russia, particularly as shown by 
her arbitrary, grasping, and encroaching course in Manchuria. 

Her persistence in remaining there after repeated promises to 
withdraw constituted a breach of faith towards Japan, and 
clearly indicated her intention to retain it as a province and a 
stepping-stone to further territorial acquisitions. Yet her 
claims on Manchuria were merely based on certain rights over 
the Manchurian Railway, a very unsubstantial foundation and 
justification for her pretensions and occupancy of the country. 

It was that unjustifiable occupation of Manchuria and prac- 
tical refusal to release her hold upon it that forced Japan to 
make war upon her as an aggressor, and practically an in- 
vader. Japan wanted peace with honor, and long and patiently 
conferred and negotiated with Russia in the hope of averting 
war, and only resorted to it when Russia's studied procrastina- 
tion and subterfuge became so wearisome and exasperating that 
they exhausted patience, and patience ceased to be a virtue. 

Russia's object was to tire out Japan without forcing her into 
war, her belief being that Japan would never dare to fight so 
great a power, much as she might, by Russian inj ustice, be pro- 
voked to do so. But Russia has been undeceived, and had her 
eyes opened at great cost. 

Japan has good reason to feel proud of her exploits and 
achievements in this great contest. Not alone is physical 
strength necessary to success in war, but science, money, and 
an intelligent application and utilization of resources. Al- 
though Japan had a great advantage over Russia, in being 
much nearer her base of supplies, she had still a very formi- 
dable adversary. 

Yet this purely Oriental nation showed, to the wonder of the 



JAPAN AND RUSSIA 383 

world, its superiority over its powerful foe from the begin- 
ning of this heroic struggle to drive away an intruder whose 
ultimate design was to accomplish its destruction as an indepen- 
dent nation. 

Against this aggressor the Japanese people are united to a 
man, with a patriotic zeal and devotion that makes every one 
of them not only willing to fight, and sacrifice his property, for 
his country, but to lay down his life for it, deeming death in 
its defence of itself glorious. Such patriotic willingness to sac- 
rifice everything for the national cause makes every Japanese 
soldier and sailor much more than the equal in strength and 
resolution, and fighting force, of each of his antagonists. He 
knows and feels that his family will be well provided for in 
his absence, and that his country is in the right, but that, with 
justice on its side, its rights and possibly even its existence 
are still gravely menaced. 

So he proves by his prowess that " Thrice is he armed who 
hath his quarrel just." 

Whether in the army or navy the Japanese are active, ener- 
getic, fearless, and determined, and these qualities, combined 
with their love of country, have done wonders against the Rus- 
sians, who are mostly unwilling hirelings without a spark of 
patriotism, or men who are in heart hostile to their own govern- 
ment. The military and naval tactics, discipline, and equip- 
ment of the Japanese are also superior to those of Russia, and 
their movements far quicker and distinguished by greater dash 
and elan. 

Their officers, too, are well trained. Most of them have been 
educated in the best colleges and naval and military academies 
in this country and Europe. Indeed, the almost universal 
spread of education among the Japanese has been very re- 
markable. Their desire has been to learn all that the rest of 
the world knows, and so place themselves in a position to utilize 
their knowledge, besides gratifying a laudable curiosity. 
European and American colleges are, and have been for many 
years, thickly sprinkled with Japanese students, and Admiral 



384 JAPAN AND RUSSIA 

Togo was educated for the navy at the United States Naval 
Academy at Annapolis. 

Japan has, therefore, a great bulwark of strength in the de- 
voted patriotism, education, and intelligence of her people, for 
she has become an educated country, the percentage of illiteracy 
there being small. Yet the marvellous revolution by which she 
emerged from Oriental exclusiveness and obscurity, and grad- 
ually developed into her present national and international im- 
portance, only began in I860. Her transformation reads like 
a romance. 

In that year, following our naval expedition to Japan, under 
the command of Commodore Perry, who in 1853 made a pro- 
visional treaty with her for opening certain ports, Japan sent 
an embassy to the United States. It came by our invitation, 
on one of our ships-of-war. This was really the beginning of 
modern Japanese intercourse with the rest of the world, and its 
wondrous change from Eastern to Western civilization. The 
Dutch traders and missionaries who, long before, were tolerated 
and then massacred at Nagasaki had been almost forgotten. 

There were in Japan in I860, as there had been from time 
immemorial, two emperors, one spiritual and the other temporal, 
known, respectively, as the Mikado and the Tycoon, and a host 
of feudal lords as powerful as those of England in the days of 
King John, when history was made at Runnymede. These feu- 
dal lords, the Samurai, carried swords, and held the power of 
life or death by hara-kiri over their servitors and vassals, and 
regarded the trading and working classes as inferior beings, of 
no social importance. They were entirely subservient to these 
feudal lords — the Samurai — and had no political voice or 
power whatever. 

The change from that feudal age to this in government, man- 
ners, and customs, solely by the will of Japan herself, is entirely 
unexampled in all history. But it was a grand and wise pro- 
gressive movement by her ruling class which brought Japan 
from her ancient isolation into the bright light of Western civ- 
ilization and made her one of the foremost nations of the world. 



JAPAN AND RUSSIA 385 

Now her government is representative, like that of the British 
Parliament or the Congress of the United States. 

But before discarding the old regime and adopting the new 
system of government, Japan sent a commission, of which the 
Marquis Ito was one, to this country and Europe to examine and 
inquire into, and report upon, the existing system of government 
in different nations; and I, among others, gave the commission 
full information as to our government and national finances. 
From what this commission learned in both hemispheres, and re- 
ported on its return to Japan, the new constitution, and new 
order of things, in Japan were formulated and adopted, with 
such radical results and amazing success as to astonish the rest 
of the world. The Japanese seemed to have acted on our own 
maxim — first be sure you are right and then go ahead. 

They took the United States for their model in the main, and 
sent me instructions to have engraved and printed their dif- 
ferent denominations of bonds and currency, after they had 
translated the lettering of ours, that I sent them, into their own 
language. I had this work done by the lowest bidder; and my 
relations with Japan have been very friendly ever since. 

In making this great change, Japan indeed showed so much 
wisdom, prudence, and sound statesmanship as greatly to sur- 
prise all other nations, for blunders were expected where she 
had so much to learn and unlearn. But she was as quick to 
learn as to unlearn, and the newly established order of things 
seemed to fit her even better than the old, like the new Western 
clothes that her people put on when they cast aside their ancient 
costume and native hair-dressing. 

She has been fortunate in the statesmen that have piloted 
her ship of state so safely through difficult waters, for they 
have shown themselves the equal of any in Europe or America. 
This is particularly true of their great leader, the Minister Im- 
perial of Japan, the Marquis Ito, who has been very appro- 
priately described both as the Mirabeau and the Bismarck of 
the Orient. 

Next to him in power and sagacity comes Count Okuma, the 



386 A LETTER FROM ITO 

Rousseau of Japan. These two men led and really made the 
revolution. 

I had the good fortune to become acquainted with the Mar- 
quis Ito when he visited this country and brought an introduc- 
tion to me thirty-five years ago, and we have since corresponded. 
A letter from him to me, dated as recently as April 14, 1904, 
throws so much light upon the war, from the Japanese point of 
view, as to make it highly interesting, for, coming from this 
high official source, it may be considered the voice of the govern- 
ment of Japan. It reads as follows: 

Tokyo, April 14, 1904. 

Dear Sir, — In answer to your letter of February 17 let me 
first of all thank you most sincerely for the constant sympathy 
you have shown to our country's cause. Your friendly efforts 
on the occasion of the Chino-Japanese war is still fresh in my 
memory and in the memory of all those who have heard of it. 
And, in general, the sympathetic attitude of public opinion of 
your country is a great encouragement to us in our faith that in 
fighting for our own future security and undisturbed enjoyment 
of the fruits of civilization, we are to a certain extent fighting 
also for the common cause of all. Just as you say, the suprem- 
acy of Russia in Korea would mean not only a constant menace 
to the very existence of our island empire, but would also mean 
the wholesale destruction of our commercial and industrial inter- 
ests already legitimately vested there in the past, not to mention 
the loss of a natural outlet for our expanding people. The con- 
stant policy of Russia in this part of the globe has steadily 
inclined towards monopolization of natural resources of the 
country she conquers and annexes. Her Manchurian policy is 
the irrefutable evidence of the above statement. So that in 
fighting for our own interests we are at the same time fighting 
for the principle of " fair competition all round " in these new 
markets of the world. I am indeed very sorry that the negoti- 
ations carried on our side, with sincere " bona-fide," were not 
crowned with success so earnestly desired. If the Russian gov- 
ernment were a little more inspired by the spirit of moderation 



A LETTER FROM ITO 387 

and of toleration for the legitimate interests of others, things 
would not have come to this pass. As it was there remained 
no other way for us but to enforce by arms what we could not 
do by reason. And we had to do so ere it would have become 
too late, for Russia was steadily and rapidly augmenting her 
fighting forces available in this part of her empire, so that be- 
fore long the sheer mass of her fighting power would have made 
it a folly for us to attempt to resist the unscrupulous march 
onward. It has been nothing but a coolly thought-out step in 
the cause of state necessity. And I am much gratified to see 
that you, as well as the general public opinion of your country, 
have understood our motives in their true light. 

Hoping that you are enjoying as robust a health as when I 
saw you last in New York, and also hoping to be able to see 
you again in no distant future, I remain, 

Yours sincerely, Marquis H. Ito. 

This letter, in clear and temperate language, shows that Japan 
was justified in her course towards Russia, and that Russia's 
course was the reverse of this. It correctly says that the policy 
of Russia in the East has always been to monopolize the re- 
sources of the country she overruns, and her career in Man- 
churia offers indisputable evidence of this fact. Hence for Ja- 
pan to have allowed her the supremacy she was aiming at in 
Korea would have been to pave the way to the destruction of the 
Japanese trade and commercial interests already established 
there, besides creating a standing menace to the security and 
very existence of the government of Japan itself. 

The alliance between England and Japan was a great triumph 
for Japanese statesmanship, and the credit for this diplomatic 
achievement is very largely due to the Marquis Ito; and never 
were popular rejoicings greater than when it was officially an- 
nounced to the people of Japan. They celebrated it with enthu- 
siasm and loudly cheered Ito. 

As for the so-called yellow peril, those who know the Orient 
best pooh-pooh it as a baseless fear, and it obviously is so. But 
it is reasonable to expect that, if Japan comes out of this war 



388 JAPAN AND RUSSIA 

with the success she deserves, the regeneration of China and 
Korea will follow under the influence of Japan. This will be a 
great triumph for Western civilization, as well as Japan, for 
these countries will then be Japanned, or rather Japanesed, and 
so converted to an open-door policy towards other nations. 

They will, consequently, all be gainers by a Japanese victory 
over Russia, and the United States will be one of the chief gain- 
ers by it in trade and commerce. Then, too, Russian defeat 
would open Manchuria and adjacent territory, (now dominated 
by Russia, and shut out from general trade and commerce), to 
the commercial, agricultural, and manufacturing enterprise of 
not only Japan but of the the world. What is now hermetically 
sealed, as it were, or at least behind the closed door, would be 
opened to modern trade, and join Japan in the march of 
progress. 

As to the conduct of the war, the Japanese have been more 
magnanimous, courteous, and humane than the Russians, par- 
ticularly in the treatment of prisoners, while the Russians were 
guilty of sowing floating mines in the open sea, or where they 
knew they would drift there, as well as in the harbors. This 
practice, of course, endangers neutral vessels, as well as those 
of the belligerents, and is both intolerably barbaric and con- 
trary to the spirit of international law. It is a settled principle 
that a neutral must not impede a belligerent nor a belligerent 
injure a neutral. 

The high sea is by common right open to all nations, and 
sowing mines where they may drift into the open Sea is an in- 
ternational outrage, especially when they are set afloat with the 
expectation that they will drift there, and so take the cruising 
Japanese ships unawares. They might easily drift into the 
Pacific. In ocean currents there is indeed no telling to what 
part of the world such mines may be carried to work havoc. 

So Russia should be checkmated in this, which is a reckless 
attack upon neutrals as well as upon Japan, by the other 
powers, and particularly by England and America, as fore- 
most in interest among neutrals. 

When the Hatsuse, a Japanese battle-ship, ran into a Rus- 
sian mine floating ten miles outside of the entrance to Port 



JAPAN AND RUSSIA 389 

Arthur and was sunk by it, all the world saw that it might 
easily have been a neutral battle-ship or a neutral trading-ves- 
sel that was sunk. 

Russia would have been within her rights if she had planted 
these infernal machines within the three-mile limit, in the 
waters of territory that she had wheedled or brow-beaten China 
into leasing to her. But in setting them adrift, where they 
might be encountered by neutrals, in the hope that they would 
destroy Japanese ships, she not only transcended her rights, but 
committed acts of disgraceful savagery. 

The mines thus set adrift by the Russians were very nu- 
merous. 

The London Times despatch-boat Haiman discovered two 
floating Russian mines near Wei-hai-wei, more than a hundred 
miles from Port Arthur, and twenty-one similar mines were 
discovered about the same time by other vessels in various parts 
of the Gulf of Pe-chi-Li and the Yellow Sea. 

Japan has naturally the sympathy and moral support of 
China in this struggle, for China has everything to gain and 
nothing to lose by Japanese victory. China has learned from 
Russia's grasping and exacting course at the time of the Boxer 
riots, and her shameless robbery of the Chinese Empire in the 
subsequent years of peace, that if Russia were now to triumph 
it would only be a question of time before she would annex as 
much of China as she wanted. 

On the contrary, if Japan is victorious, as she deserves to be, 
and in all probability will be, China knows that her empire will 
be protected from disintegration so long as Japan has the power 
to aid her to that end. They represent kindred races, and 
" blood is thicker than water," although they may fight, as 
China and Japan did, with results very gratifying to Japan, 
and very creditable to her naval and military prowess. 

Speaking of that war in which the then Admiral Ito, and 
present Marquis, covered himself with glory, it transpired that 
after the battle of the Yalu, he granted a young officer a few 
days' leave of absence, and that, when the leave expired, the 



390 JAPAN AND RUSSIA 

admiral received this brief despatch: "Owing to unforeseen 
circumstances, I cannot, as expected, return to duty." 

The admiral replied: " Give reason, or return." 

A little later this message reached him from a hospital at 
Iokosuta : " Train lost — cannot travel ; leg lost — cannot run. 
Will return if you insist." 

The admiral, of course, did not insist; but the incident fur- 
nished a good illustration of the patriotic devotion and indom- 
itable courage, energy, and determination of purpose of the 
Japanese in war, whether in the army or navy; and it is of 
such men that the army and navy now engaged in deadly strife 
with Russia is composed. 

Let us hope that this great and terrific struggle will soon 
come to an end, for its cost in men and money to both sides is 
very heavy. The full extent of the losses in men on either side 
will never be learned, for warring nations always underrate 
them. But the losses on the Russian side must be far heavier 
than on the other, the Russian line of communication being so 
immensely long. It extends over 5000 miles. Moreover, it is 
impeded and blocked in spots, while the Manchurian towns have 
been converted into noisome pest-holes, full of horrible scenes. 

It is a sad reflection on the scourge of war that probably few 
of those whom Russia has sent to the East will ever return. 
Japan, however, is near home, and the sea is open to her to 
transport her wounded and supplies, and so she may be said 
to be favored by Providence in her great struggle to preserve 
her rights, repel invasion, and protect her national existence. 



OUR AGE OF GOLD 

Contributed to "The St. Louis Republic," October 2, 1904. 

THIS is the real golden age, both as to the progress of 
civilization and the increased production of gold itself. 
The world is witnessing an inflation of gold, chiefly ow- 
ing to the improvement and cheapening of metallurgical proc- 
esses and machinery for mining and milling gold, as well as 
to the advance in technical mining skill, and greater and cheaper 
facilities than were before within reach for exploration, trans- 
portation and development work in mining regions. 

It was only natural that fresh enterprise and superior en- 
gineering skill should have been attracted and infused into the 
gold-mining industry by these growing inducements to develop 
it. Hence, some of the many mines and tracts of gold-bearing 
land in this and other countries, including Mexico, South Amer- 
ica, India, China and even Korea, that had been considered too 
poor to be worked at a profit, are now, under the new methods 
and metallurgical processes, being made to produce gold and 
silver on a profitable basis. 

Because of the economies, improvements and facilities that 
have become available, a vast amount of " tailings," the accumu- 
lation of many years, and at one time considered worthless, are 
also being worked over again with highly profitable results, so 
rich are they in gold that was not secured by the old and waste- 
ful processes. 

An old gold miner said to me recently: " It pays to work 
over the tailings now, though it wouldn't have paid a few years 
ago." 

The same is true of many millions of tons of low-grade, ore- 
bearing quartz, heretofore neglected and passed over as likely 
to cost about as much to mine and mill as it would yield in gold, 
391 



392 OUR AGE OF GOLD 

A new field for gold mining is thus being opened all over the 
world; for what is true of one country is true of another in 
this matter, example being contagious. We already see it un- 
dergoing extensive development and producing large cash re- 
sults in Australia and California. The gold-mining industry 
is indeed assuming magnificent proportions. In its practical 
effects it is the same as the discovery of new gold mines; and 
we are only at the beginning of what I may call this new era 
in gold mining. Indeed, its effects on general business and 
prices have not yet become perceptible. 

The world's visible gold supply is growing rapidly in both 
hemispheres, and is larger than ever before. The United States 
Treasury held on July 1, last, $709,620,322 in gold, by far 
the largest accumulation in the world, of which $29,483,940 was 
represented by gold certificates issued against deposits of gold 
coin by national banks, and $150,000,000 was, in theory, re- 
served for the redemption of legal-tender notes. 

This total is colossal in comparison with what it was a few 
years ago, when President Cleveland was negotiating with J. 
P. Morgan and August Belmont for an exchange of United 
States bonds for gold in order to restore the Treasury's greatly 
depleted gold reserve. The $150,000,000 set aside for the re- 
demption of legal-tender notes had then been encroached upon 
more than a hundred millions, and the balance was growing 
smaller daily. We have much reason to congratulate ourselves, 
as a nation, on the auspicious course of events in our financial 
history since that time. The recent payment of the Panama 
Canal purchase money in gold was an easy matter for us. 

The gold circulation of the United States is now at its max- 
imum, the last Government report, at the end of last December, 
estimating its total at $1,314,622,524, including its own gold 
holdings, and the aggregate is still increasing. A similar rise 
in the tide of gold is progressing in Europe. The Treasury 
at the same time estimated that the total amount of money of all 
kinds in circulation in the United States, including its own gold^, 
silver, nickel and note holdings was $2,466,345,897, an average 
of $30.38 per capita. Its silver holdings, amounted on July 1 



OUR AGE OF GOLD 393 

to $515,449,603, of which $486,000,000 were silver dollars. 

It is apparent from the bank and mint reports that a much 
larger percentage than usual of last year's gold product, both 
in America and Europe, went into actual circulation as coin, 
as well as into the banks and trust companies to swell their 
reserves, and correspondingly less of the year's product was 
consequently absorbed by the arts and manufactories. This, 
with the diminished activity of trade, has contributed largely 
to the abundance and cheapness of money in the open markets, 
a feature that will become still more prominent in the future. 

On July 1, last, the nine principal European banks held in 
gold the equivalent of £367,048,326 (or $1,835,241,630). Of 
this large total the Bank of England had £35,339,282, the Bank 
of France £111,059,377, the Bank of Germany £36,872,000, 
the Imperial Bank of Russia £91,330,000, the Austro-Hunga- 
rian Bank £47,118,000, the Bank of Spain £14,716,000, the 
Bank of Italy £22,104,000, the Bank of The Netherlands £5,- 
477,000, and the National Bank of Belgium £3,032,667. 

At the corresponding date in 1903 the total held by these 
banks was only £334,545,384. This shows an increase in their 
gold holdings during the year of £32,502,942 (or $162,514,- 
710). Here we have a practical commentary on the rising tide 
of gold in Europe. This increase, of course, largely resulted 
from the resumption of production by the Rand mines, which 
had entirely ceased early in April, 1900, owing to the South 
African War, but it was stimulated by the causes I have pointed 
out. 

The increase from this source has been steady, and the yield 
of the Transvaal mines is now nearly as great as it was at any 
time prior to the war there, despite an inadequate labor supply 
and bids fair before very long to largely exceed it. The re- 
sumption of mining, according to the reports of the Transvaal 
Chamber of Mines, dates from May, 1901, but the monthly gold 
product reached only 52,397 ounces in December in that year. 
In March, 1902, however, it was 104,128 ounces, and in Decem- 
ber 189,537 ounces. In 1903 it increased so rapidly as to reach 



394 OUR AGE OF GOLD 

2,962,688 ounces, valued at £12,600,000, against £7,253,665 in 
1902, and the output has since continued to increase. But until 
the supply of labor in South African mines is increased, they 
cannot be worked to their full capacity. When they get all 
the labor needed they will outstrip their previous records. 

The effect of this expansion upon the money markets of 
the world will ultimately be all the greater because of its being 
a reaction from previous contraction. From October, 1899? till 
the end of 1901 there was a material decrease in the world's 
production of gold, owing chiefly to the forced suspension of 
mining in South Africa. This caused, or at least did much to 
cause, the marked monetary strain and depression that prevailed 
in Europe during that time, and particularly in Great Britain. 

Yet, in 1898, 1899 and 1900, the United States, while in- 
creasing its own gold product, imported from other countries 
over $160,500,000 more gold than it exported, which caused 
the shoe to pinch all the harder elsewhere. During this period 
the Bank of England and the European continental banks lost 
heavily in their gold reserves, and advanced their rates of in- 
terest by degrees to unusually high figures while prices for 
British Consuls and all stocks and bonds declined to extremely 
low figures. Money was simultaneously scarce and dear all 
over Europe, chiefly, be it remembered, if not entirely, in con- 
sequence of the closing of the South African gold mines, and 
the loss of their output to the money markets. 

The shoe that then pinched so hard through the curtailment 
of the gold supply is now easy, and growing easier all the 
time; for exactly opposite conditions as to the gold supply 
exist, although these have not prevailed long enough to attract 
much attention and produce the results to which they will ulti- 
mately lead. From a famine we have passed to a feast of 
gold. 

Both the Klondike — that is, Canada — and Alaska, after 
the end of 1900, deepened somewhat the effect of the stoppage 
of the South African gold supply by disappointing great ex- 
pectations. That was Canada's best year for gold production, 



OUR AGE OF GOLD 395 

when she reported a total of 1,350,475 ounces, worth $27,916,- 
752, whereas in 1901 she reported only 1,183,362 ounces, valued 
at $24,462,222; in 1902 still less; and in 1903 only 943,314 
ounces, valued at $19,500,000. Alaska's yield fell off with that 
of the Klondike after 1900, but partially recovered in 1902, its 
total being 378,476 ounces, valued at $8,345,800; only to de- 
crease in 1903 to a valuation of $6,921,157- Recent discov- 
eries, however, promise better returns from this quarter. 

On the other hand, until 1903 California showed a moderate 
but steady gain in production year by year, after 1897, when 
its product decreased to 707,160 ounces, although there was 
meanwhile a slight falling off in Colorado and Montana. In 
1902 California's gold output rose to 828,419 ounces, valued 
at $16,792,100, and the United States increased its product 
105,768 ounces, making the total for that year 3,911,268 ounces, 
valued at $80,000,000, the largest in its history, and a little 
larger than South Africa's record output of 1898. 

But still the United States in that year lost its lead among 
gold-producing countries, which it secured in 1900, through 
Australasia's increasing its output to 4,145,876 ounces, valued 
at $82,454,344. In the Australian report Westralia has come 
to the front, with nearly fifty per cent, of the entire Austral- 
asian product, whereas in 1893 Westralia represented only 59,- 
548 ounces, or less than three and one-half per cent, of the 
1,796,130 ounces produced by all Australasia. 

The gold product of the United States in 1903 fell off about 
$5,500,000 from that of 1902, the total being valued at $74,- 
425,340. California's product, too, fell off a trifle in value to 
$16,535,525 in 1903. The decrease in the United States, how- 
ever, was entirely in Colorado, owing to the interruption of 
mining by the labor troubles, Colorado's product having fallen 
$6,500,000 short of that of 1902. But our neighbor Mexico 
had an output of $12,550,000 in 1903 against one of only $11,- 
293,524 in 1902. Its gold product has been increasing an- 
nually for a decade. 

From 1887 to the end of 1903 the total South African 
product was 23,929,589 ounces, valued at £101,648,126 (or 



396 OUR AGE OF GOLD 

$508,240,730.) From 1890, when it was 453,172 ounces, the 
Australasian product increased steadily till it reached 4,105,- 
526 ounces in 1899- Then it fell back to 3,729,961 ounces in 
1900; but reached 3,792,364 in 1901, and in 1903 ran up to a 
total in value of $88,170,909, its largest output on record, 
leaving it still the leader of the gold producing countries. 

With the United States a close second, and the Transvaal 
third among the gold producers, Russia is the fourth, with a 
product in 1903 valued at $24,000,000; Canada the fifth; Mex- 
ico the sixth; British India the seventh, with an output valued 
at $11,118,820; China the eighth, with one of $6,000,000; Rho- 
desia, not in the Transvaal, the ninth, with one of $4,146,250; 
Korea the tenth, with one of $4,000,000, and Brazil the eleventh, 
with one of $2,800,000. The other gold-producing countries 
report their product last year at from only $1,000 for Portugal 
to $2,150,000 for Hungary. 

The gold product of the world in 1901 was 12,894,856 
ounces, valued at £54,774,769 (or $266,559,884) ; and in 1902 
it had risen to 14,734,269 ounces, worth $304,583,862; and in 
1903 it aggregated in value $327,000,000. All this was against 
a product of only 4,976,980 ounces in 1881, valued at £21,141,- 
216 (or $102,883,135), and 6,286,235 ounces in 1891, valued at 
£26,702,669 (or $129,947,793). This enormous increase re- 
flects the rapid development of the mining industry, and the 
improvement in mining methods and engineering. 

The swelling tide of gold throughout the world, after supply- 
ing the wants of the arts and manufactures, will naturally find 
its way into the banks, and involve monetary ease and in- 
flation in about the same degree as would an increase in paper 
money redeemable in gold; for the fresh gold supply will 
furnish a fresh basis for paper-money issues and mercantile 
and stock-exchange loans, that is for expansion. 

Consequently, it will favor higher prices — a rising tide of 
prices — for securities and commodities, and this increased and 
growing abundance of money will also materially tend to 
cheapen it, and we shall see low interest rates which will in- 
cidentally foster speculation for a rise not only in stocks and 



OUR AGE OF GOLD 397 

commodities, but real estate, until prices have been adjusted to 
the enlarged volume of available money. This is a point well 
worth considering by investors and those speculators who are 
prepared to operate for a long pull. 

This gold inflation is obviously the safest kind of inflation 
we could have, and it will act as the mainspring of general 
activity in trade and speculation, and tend to the promotion of 
general prosperity until prices rise above values sufficiently to 
cause a downward reaction, as they will be sure to do in the 
end. 

Gold is only the standard of value, and as money it is merely 
the medium of exchange for everything else of value. There- 
fore, when its growth to excessive abundance inordinately 
stimulates a rise in prices, the same reaction to a normal basis 
is invited as if the inflation was in proper currency instead of 
gold. 

At the same time the largely increased borrowing demand 
resulting from active speculation in stocks and commodities 
would tend to make the money market more and more active in 
the face of the increased supply of gold. Thus, demand, by 
outrunning supply, would finally raise the rates of interest 
again, these being regulated by demand and supply, like prices 
in general. Still, it is interesting and may be valuable to us to 
note that we live in the true Golden Age — the Age of Gold. 

Not only is the new era of gold mining to be marked by 
the utilization of low-grade ores, " tailings " and other before 
neglected mineral resources, but the recent improvements in 
economies in the mining industry will stimulate exploration, and 
lead to fresh discoveries in many different directions and in 
now unknown mineral territories. 

There are vast unexplored fields before the gold miner, and 
many wide tracts of mineral land which have only been par- 
tially rifled of their gold by the unskilled miners of other days. 
These offer rich returns to the scientific miner with his new 
processes and economies. 

Numerous promising places in the Rocky Mountains have 
been abandoned after superficial, or only partial, exploration; 



398 OUR AGE OF GOLD 

and many of the old and deserted gold mines of Europe, Aus- 
tralia, Mexico, Peru and India could be made to " pay " hand- 
somely by modern treatment of ores and technical mining skill. 

To show the great extent of the economies involved in the 
new metallurgical processes (in combination with technical 
skill), I will say that at Kalgoorlie in Western Australia the 
managers of the large gold-mining properties there not only 
claim but have fully substantiated the claim that last year they 
reduced the cost of their treatment of ores no less than twenty- 
five per cent., to as low a point as sixteen shillings a ton sterling. 

Here, indeed, is money-saving and money-making progress 
of the most practical kind in gold mining. 

We may rest assured that there will be a great development 
of gold mining in America, particularly from Texas to Pata- 
gonia, in the not remote future; for all South America is, 
roughly speaking, a vast gold mine, that only requires capital, 
science, and labor to unearth its treasures. 

Even the ancient Mexicans and Peruvians, with their crude 
mining methods, were able, before the coming of Cortes and 
Pizarro, to accumulate vast quantities of gold, which went to 
enrich the Spanish conquerors and give wealth to Spain; and 
how much more than they did can be done in this, our Golden 
Age of great achievements, with the aid of the most recent 
metallurgical processes, and our advanced technical skill, pav- 
ing the way to success. So, the glut of gold is likely to go 
on increasing in this Golden Age of gold mining; and America 
and the world will be all the richer and the better for the 
inflation. 



THE WAGE EARNER AND CAPITAL 

. Contributed to " The Third Rail," January 4, 190T. 

I TAKE pleasure in responding to the invitation of The 
Third Rail to give my views on matters of interest to the 
grand army of men employed by the Brooklyn Rapid 
Transit Company. In doing this I shall not confine myself to 
a discussion of the relations between Labor and Capital, but 
be sufficiently discursive to touch on many points that I con- 
sider deserving of attention by all wage earners, both in their 
general conduct and their dealings with employers. 

At the same time I would like to impress upon all employers, 
both individual and corporate, and their managing representa- 
tives, the duty they owe to their workmen of treating them with 
respect and consideration, as fellow members of the great 
Brotherhood of Man, and establishing closer and more friendly 
relations with them than have generally existed between the 
owners and managers of large manufacturing corporations and 
their workmen. By neglecting to foster this friendly feeling 
these employers of labor have lost much, far more than they are 
probably aware of, for sentiment is a powerful factor for, or 
against, anything, and the mere payment of wages should not 
be regarded as the only reward of honest labor. 

There is a feeling of satisfaction in work well done by those 
who do it, and this satisfaction is one of the compensations of 
labor, apart from its money value, while another compensation 
is the appreciation of the work by the employers. If this ap- 
preciation is withheld, and workmen are treated as mere ma- 
chines, or cogs in a wheel, they are less interested in their work 
than they otherwise would be, and the tie of sympathy which 
should exist between them is wanting. This tends impercepti- 
399 



400 THE WAGE EARNER 

bly to lower the quality and value of their work, and impair 
their general efficiency, as well as to create discontent and en- 
courage strikes. 

That mere wages are not all that men work for would be 
shown if they were told to dig holes in the ground and then fill 
them up again, without any other purpose than to give them 
employment. They would probably all refuse such work, but, 
if any of them undertook it, they would soon tire of it. Good 
workmen take pleasure in their work because there is utility 
in it. 

With friendly relations between employers and the employed, 
strikes would be impossible, for they would both come together 
and adjust their differences in a spirit of mutual interest, each 
side with a due regard to the other, and prepared to give and 
take on a fair basis. But, when there is a gulf between the 
two, the way is paved to disagreements and strikes, troubles that, 
with friendly feelings, and small concessions, might be averted. 

Large corporations, and all other large employers of labor 
and their representatives, should take this phase of their rela- 
tions to their employees into serious consideration and thus 
promote that harmony and good understanding between Labor 
and Capital which is essential to the best interests of both. 

Turning to the men of the Brooklyn Rapid Transit system 
themselves, I need hardly say that, like men of all degrees in 
all callings, self-improvement should be their constant aim in 
life. By this they may not merely help themselves through in- 
creasing the value of their services, but increase their usefulness 
as citizens, and correspondingly benefit the nation. The indi- 
viduals composing the nation make it what it is, just as a 
mountain is composed of atoms, and every individual should 
feel himself responsible for his own share in it, and endeavor to 
do his duty both to himself and society, and bear this in mind — > 

" Honor and shame from no condition rise: 
Act well your part; there all the honor lies." 

Every wage earner, every citizen, should have not only his 



THE WAGE EARNER 401 

own interest and welfare at heart, but that of the country, 
whether he be a born or a naturalized American, and although 
all cannot reach the highest offices, or become Carnegies, the 
way is open to all, with the necessary energy, perseverance and 
tact, to reach the topmost rung in the ladder of success, as it 
is in no other country. All well directed efforts tend, or lead, 
to success, and patience and perseverance often work wonders. 

The conductor, or motorman, or unskilled laborer of to-day, 
may be the millionaire, the Captain of Industry, or the United 
States Senator of the future. 

George Stephenson, the great railroad engineer, and builder 
of the first English locomotive, was a fireman in a foundry, and 
it took him fifteen years to build his engine. There is every 
incentive here, in this great land of progress and opportunity, 
to right-doing and right-living, and much to encourage good 
moral conduct, which includes sobriety and integrity. Good 
business habits, industry and frugality, must also be added, for, 
without all these qualities, advancement to high positions, or 
success in any direction, will be slow and uncertain, if not im- 
possible, in any calling. A man may be his own best friend, 
or worst enemy. 

Although Mr. Carnegie is the most conspicuous living ex- 
ample of great wealth achieved entirely by his own efforts and 
industry, from the smallest and poorest beginnings, there are, 
living and dead, thousands of similar examples of great indus- 
trial success, involving quick transitions from obscure poverty 
to wealth and eminence, both in the New World and the Old. 
These should be looked up to as guiding lights, by wage earners 
in all industrial pursuits, and they should remember that their 
best work is that which they do cheerfully and hopefully. 

Most of our best known railroad presidents, past and pres- 
ent, including the late " Tom " Scott and A. J. Cassatt of the 
Pennsylvania, and James J. Hill of the Great Northern, began 
their careers at the lowest rung of the ladder they so success- 
fully climbed ; and what has been may be again. But the only 
sure way to success is to do well whatever work we are engaged 



402 THE WAGE EARNER 






in, or undertake to do. There is satisfaction to both the em- 
ployed and the employer in work conscientiously done, and labor 
dignifies the laborer. 

A man's laudable ambition to better his condition should never 
be allowed to lessen his interest in his present work, for the 
excellence of that work is the best promise he can have of future 
advancement; and, even if he fails in securing advancement, 
he strengthens his hold upon the work he is doing by doing it 
well. He should never lose sight of the fact that all labor is 
honorable, nor underestimate the value and importance of little 
things. 

It is not so much what a man does, to earn his living, as what 
he is that stamps his character, and makes, or unmakes, him. 
Hence he should never feel above his work, for that would lead 
to poor work. By doing his best, always, he takes the straight 
course to improvement, and unless he improves he is apt to ret- 
rograde. Work is itself an educator, and often the best edu- 
cator. 

The great inventors, and industrial capitalists of the world, 
have mostly sprung from the ranks of working men, and were 
hard workers. 

Industry and application, combined with close attention, as 
well as intelligence, are as necessary to success as general good 
character. Self-discipline, self-control and self-respect are 
more valuable to success in life than mere book knowledge, or 
anything that teachers can impart, beyond an ordinary common 
school education, and the more difficulties a man encounters and 
surmounts the stronger his character becomes, and the better 
he is equipped to fight the battle of life. 

The lesson in economy, of both time and money, furnished by 
Russell Sage, should not pass unheeded in these days of lavish 
expenditure and time-wasting pleasures, for economy is the foun- 
dation of the fortune of a self-made man, starting without a 
dollar. He must save in order to amass any capital whatever, 
and he should economize his time as well as his money, for time 
is money. 



THE WAGE EARNER 403 

The man who spends all he earns never becomes independ- 
ently well off, never lays the foundation of a fortune. 

Russell Sage began life in extreme poverty, and earned his 
own living, from early boyhood. He was entirely the architect 
of his own fortune, and died at ninety, leaving seventy millions 
of dollars, more or less. If he had not been thrifty, persever- 
ing and patient, as well as untiringly industrious, and a model 
of punctuality in attending to business, and also quick to see 
and avail himself of opportunities for money making, he would 
never have accumulated great wealth. 

Moreover, he was very temperate, abstemious, and a plain 
liver, and never wasted, or allowed others to waste any of his 
time, and these were direct aids to his success as a money maker. 
Some of the characteristics he possessed are worthy of imita- 
tion, and much needed in this country, to correct our expensive 
and extravagant habits. 

To economize in our customary living expenses may call for 
some self-denial, but it is absolutely necessary for the wage 
earner without capital, to practice that economy and self-denial, 
to a reasonable extent, if he wants to provide for the future and 
improve his own prospects by laying up enough to enable him, 
some day, to start in business on his own account, or avail him- 
self of opportunities for profitable investment. 

This habit of saving is possessed by comparatively few of 
our people, but should be practiced by all in self-defence; that 
is for self-protection and self-advancement. 

Next to the care of the body, and circumspection in conduct, 
should be the care of the purse, by those who want to get on in 
the world. Mere ordinary industry and thrift will give a man 
of average capacity, in time, sufficient capital to make him inde- 
pendent, and money makes money. Having once accumulated 
the nucleus of a fortune, a fortune itself, by the exercise of 
good judgment, may be within his reach. 

Reverting to the relations between the employed and the em- 
ployers, it is satisfactory to find that they are becoming more 
reciprocal than they ever were before. The old struggle of La- 



404 THE WAGE EARNER 

bor against Capital is giving place to equitable adjustments of 
differences and harmony of action. Both sides understand each 
other better than ever before, and the labor unions, once so bit- 
terly and strenuously opposed by employers, are now very gen- 
erally, if not universally, recognized by them, besides being 
admitted to be good agencies for educating the men belonging 
to them. 

This is a great change from the old times, when their right 
to belong to labor unions was questioned, or denied. The 
right of Labor to combine is now acknowledged to be as absolute 
as that of Capital to combine, and workmen have largely profited 
by their unions. They have secured by them shorter hours of 
work, and better wages than they ever had before; and many 
hardships and abuses formerly inflicted upon their workmen by 
employers, have been corrected. 

It was an abuse of Labor, and a cruel injustice, to work a 
man sixteen hours a day. Yet testimony given, before a Con- 
gressional Labor Committee, developed the fact that men were 
often worked fifteen hours a day, in iron and other manufac- 
tories, and in some works, not unseldom, sixteen hours, before 
they combined, and their unions interfered, to shorten the hours 
of labor. 

But of course, in the re-adjustment of the relation between 
Labor and Capital, brought about by the labor unions, there 
have been many just complaints made on both sides. Innumer- 
able instances of injustice and hardship have been brought 
against the so-called tyranny of Labor, as well as against the so- 
called tyranny of Capital. Yet, on the whole, their relations 
have been growing better and better, and less and less bitter, 
than they used to be. Meanwhile the tendency is towards a di- 
vision of the profits of industry in the settlement of wage con- 
troversies, and many large manufacturing companies have 
voluntarily, as a matter of policy, adopted that system, in part 
payment of their employees. This is an equitable system, and 
likely to become, before long, much more general than it already 
is, and ultimately universal, for it puts a stop to the complaint 
of Labor not being allowed to share in the profits of Capital. 



THE WAGE EARNER 405 

It also tends to keep the employees from seeking other em- 
ployment. It is likely to be the final solution of all wage ques- 
tions, and the only solution which will remove all discontent, 
on that score, on the part of Labor. 

For the time being, however, it is well to let well enough 
alone. Wages are good, and were never higher, and although 
the cost of living is higher than ever, the wage earners of the 
country are as prosperous as they ever were, and may they 
always remain so, and may employers and employed be always 
ready to meet each other on the friendly basis of mutual interest 
and reciprocity. 

In conclusion I will say to the fourteen thousand employees of 
the Brooklyn Rapid Transit Company, that some remedies are 
worse than the disease they are intended to cure, and strikes 
have often proved to be remedies of this kind. They have been 
disastrous to both the employers and the strikers, and therefore 
a strike should be avoided by all possible means. 

It should be the last resort, after arbitration has been of- 
fered and refused, and every effort has been made to secure a 
peaceable settlement of differences, for a strike, like a law suit 
between individuals, is a declaration of war, and we know the 
cost and uncertain consequences of war. 

It is consequently the duty of both sides in a labor contest, 
as well as to their interest, to endeavor to settle their differences 
by every means in their power, and, above all, by arbitration, 
when other means fail, so as to avoid that damage to both which 
a strike would involve ; and, in labor difficulties, as in everything 
else, where there's a will there's a way. 

The loss of business by the employers, in the event of a 
strike, and the loss of wages by the strikers, should be equally 
well considered by both sides, before either did anything to pre- 
cipitate it. For either to neglect any means of avoiding a strike, 
in seeking a settlement of their differences, would show that 
they were blind to their own interests. 

This would be a blunder, and one of those blunders that are 
worse than crimes. Then, too, other conditions being equal, 
public sentiment always leans towards the labor side, in disputes 



406 THE WAGE EARNER 

between Labor and Capital; so Labor, especially, should be 
particularly careful to do nothing to weaken this moral sup- 
port, and influential force in its favor, this public sympathy, 
which counts for much, and which it would be folly to forfeit. 

Fortunately trades unions are more reasonable and conserva- 
tive than many of their least intelligent members, which goes to 
show that there is safety in numbers as well as strength in unity ; 
and the Bible tells us that in the multitude of counsellors there is 
wisdom. 

To regard Capital as the natural enemy of Labor, as some 
hot-headed and ignorant agitators have done, is an entirely false 
assumption. Labor and Capital are necessary to each other, 
and, to secure the best results for both, they should always work 
in harmony, in a spirit of fairness, and with mutual respect for 
each other's rights and a friendly interest in each other's wel- 
fare. 



RAILROAD AND INDUSTRIAL CAPITALIZATION 

Contributed to " Government " for August, 1907. 

THE subject of overcapitalization on which you invite me 
to write a few words for your magazine happens to be 
one of particular interest at this time. In this very 
active period of business reform, overcapitalization is an evil 
that must be classed with rebates, railroad discriminations and 
other abuses which were incident to our extraordinary develop- 
ment during the last half century, and especially to the striking 
failure of our Legislatures to keep pace with national progress. 
Howsoever this evil may be regarded, it must be recognized 
that it was inevitable in the past, that it is inadvisable in the 
present, and will be impossible in the future should public opin- 
ion exert its rightful sway, as it usually does in the long run. 

Let us briefly look into a few of the causes which were respon- 
sible for this abuse. Thirty or forty years ago this country was 
greatly in need of transportation, and national development 
was impossible without it. We had millions of square miles of 
territory rich in natural resources but totally undeveloped, sim- 
ply awaiting population, capital and transportation. Of course, 
transportation must be provided before either population or 
capital could venture with any freedom into the Great West. 
In those days it was vastly more difficult to raise $1,000,000 
for a new railroad enterprise than it would be to procure $100,- 
000,000 in these times. The public was not accustomed to 
such ventures, and the country did not then contain the large 
number of wealthy men who must be depended upon to back 
such great enterprises. In those days railroads required rela- 
tively large capital; the risks were new and great, and some 
means of securing large profits had to be devised in order to 
tempt men of means and ability to venture into such enterprises, 
407 



408 OVERCAPITALIZATION 

which from their very nature depended upon long time for profit. 
Our earliest railroad builders were men of unbounded faith in 
the future, and they well knew that many years of patience and 
loss would be necessary before such enterprises could be suc- 
cessful. It is almost axiomatic to say that in this country our 
railroads, though not the only, have been the principal factor 
of progress. In the United States, railroads were called upon 
to develop both population and traffic. In Europe, population 
and traffic were already in existence and simply awaited the 
railroad. When railroad building first began, England was al- 
ready a closely settled country; and it was only necessary to 
construct the line to obtain profitable traffic at once. No 
special inducements were necessary for the attraction of capital, 
and no period of waiting or loss was required to develop traffic. 
It was vastly different here; railroads had to be built across 
thousands of miles of new country, frequently over practically 
insurmountable mountains and valleys where neither traffic nor 
population existed; and their builders, men of monumental 
ability and enterprise, knew full well that a generation must 
pass before such enterprises could be considered profitable and 
solid investments. 

Under such conditions what inducements could be offered to 
overcome such overwhelming obstacles? While government aid 
was eagerly sought, it was restricted mainly to the Pacific roads 
where political reasons, such as unification of new territory, 
justified government support. Another form of national aid 
was the giving of large land grants to railroad corporations as 
a stimulus to the settlement of new territory and the building 
of roads adjacent thereto. Even these helps were insufficient. 
Meanwhile, the treasures of the Great West offered irresistible 
attractions to new enterprise and settlement. The demand for 
more railroads was insistent; then came the devices of stock- 
watering and overcapitalization as means of inducement to new 
capital. Roads were often built entirely on bonds; and stock, 
having little or no value except the vote, was given away for 
various purposes or used as means of speculation and frequently 
found its way back to the original promoters at bargain prices. 



OVERCAPITALIZATION 409 

This era of speculative railroad building was naturally accom- 
panied by all sorts of illegitimate operations; overcapitalization 
bearing a leading part. No one would now dare think of re- 
sorting to such practices as were common in those days. They 
were utterly indefensible, and yet as an expedient served their 
purposes in raising much of the capital with which to develop 
our early railroad systems. Our great railroad builders were 
fully entitled to great profits, since their boldness and skill de- 
veloped the finest railroad systems the world has ever seen, and 
without them the United States would never have obtained its 
present marvelous position and prosperity. We will admit their 
methods were open to serious criticism, and would not be tol- 
erated in these days of improved business standards. Never- 
theless, they were the methods of the day and must be judged 
as such. I do not wish to be understood as defending or apolo- 
gizing for overcapitalization, for I consider it an economic evil 
of the most dangerous character, and its penalties — political 
as well as economic — cannot be averted. It should not be 
forgotten in this connection that the great wave of grangerism 
and anti-railroad agitation which swept this country in the 
eighties was a direct revulsion of popular feeling against the 
burdens of overcapitalization and their tax upon traffic. These 
were the political results of such abuses. The economic conse- 
quences which followed — somewhat late to be sure — were wit- 
nessed in the reconstruction period that took place during the 
year ninety-seven, when many millions of railroad capital were 
literally wiped out by reorganization. 

To-day our railroads are comparatively free from overcap- 
italization, either because much of the water has been eliminated 
by reorganizations, or because the increased value of terminals 
and other properties, as well as the large improvements paid 
for out of earnings, have increased the intrinsic value of shares 
which at one time may have been practically valueless. This 
process of accretion has been going on for man} r years so that 
to-day there is comparatively little difference between intrinsic 
and market values. Of course, some recent departures from 
sound railroad financing can be cited; but I am speaking in 



410 OVERCAPITALIZATION 

broad terms and have no hesitation whatever in asserting that 
American railroad investments are now sounder financially than 
any similar class of securities in the world, and this notwith- 
standing that to-day they are compelled to borrow such enor- 
mous sums in order to meet the demands of a wonderfully ex- 
panding traffic. A comparison greatly in our favor could be 
made with British railroads, which have for years been inflating 
their shares by a policy of charging improvements to capital 
account; the American system being to charge such items against 
earnings. The result is that British railroad shares, which were 
once held up to us as models of soundness and honest capitaliza- 
tion, are now seriously threatened with overdoses of water ; and 
unless the present policy is changed, English stockholders will 
soon be discarding their home favorites for the more soundly 
managed American railroad security. 

I have dwelt considerably upon the overcapitalization of our 
railroads. Just a word about overcapitalization in another di- 
rection, where it is a vastly more serious affair. As just stated, 
we now have little to fear from overcapitalization of railroads; 
but an inflation has taken place in our industrials of the most 
extravagant character and this is one of the most serious men- 
aces to our industrial and financial future. A feature of our 
national development which has attracted world-wide attention 
during the last ten years has been the consolidation of nearly 
all our great industries into a few units. This era of consolida- 
tion or " trust-making " must be classed as an industrial revolu- 
tion of the highest import, containing tremendous possibilities 
for both good and evil. Within a few short years a large pro- 
portion of our industries were combined or turned into trusts, 
and securities issued in exchange aggregating about $6,000,- 
000,000. 

Now, many of the objects of these combinations were per- 
fectly legitimate. The seeking of better and more economic 
methods of production and distribution was eminently proper, 
but the grasping for monopoly was not legitimate and has 
proved more responsible for the political and social unrest of the 
times than any other single cause. Nothing has done more 



OVERCAPITALIZATION 411 

to stimulate Socialism than this unwholesome tendency towards 
monopoly and excessive centralization. On this feature, how- 
ever, it is not my intention to dwell further, for I wish to con- 
fine myself simply to the effects of overcapitalization in the 
industrial world. I must even entirely pass over the overcapi- 
talization of public franchises, a subject of sufficient importance 
to demand special treatment. We are already threatened with 
political and economic disturbances very similar to those which 
followed the era of railroad expansion in the seventies. I need 
not consume time by touching on such familiar problems. 
There is this great difference, however, with the seventies, that 
in these times of enlightenment and great prejudice against 
corporate wealth, the consequences are likely to be much more 
serious, unless corrective forces are energetically and promptly 
applied. Of these $6,000,000,000 industrial securities, it is 
safe to say that fully one-third represents nothing but water or 
overcapitalization. Many of my readers can recall without diffi- 
culty one consolidation following after another, each with its 
quota of newly watered stock. Now compounded water is very 
different from compounded interest; the one undermines, the 
other builds up; the one threatens to break loose, the other de- 
velops strength. In some fashion or another this water must be 
eliminated, and when that process begins trouble will follow. 

We are all familiar with the fact that these watered stocks 
when first issued represented practically nothing but voting 
power. They were usually issued as a premium to induce un- 
willing members to join the combine or to pay fabulous com- 
missions to promoters' syndicates or bankers for their part in 
floating such schemes. By great good fortune, which no one 
could anticipate and which was largely due to a series of good 
harvests, we have had an unexampled period of prosperity. 
This has unquestionably delayed and probably will greatly 
modify the reaction which must fall upon this class of securities 
whenever industrial depression sets in. Many of the industries 
embraced in the trust movement have had a series of profitable 
years far beyond all expectations, increased, no doubt, by the 
great power which these corporations exert over their own mar- 



112 OVERCAPITALIZATION 

kets. In consequence of these conditions, many industrials have 
been paying dividends on watered stock which were never an- 
ticipated. A few of the best managed concerns have put so 
large a portion of earnings into plants that the common stock 
really represents some value, but such instances are rare; and 
the question of supreme importance is what will become of these 
common stocks when business reacts, prices decline, and profits 
come down to a normal level. Even a moderate business de- 
pression would quickly wipe out many of these inflated divi- 
dends, causing violent and serious readjustments in the stock 
market, for it must be kept in mind that the earning power of 
the industrials can never be as stable as that of the railroads. 

It is farthest from my intention to be pessimistic regarding 
the situation. By nature I am an optimist and have an abid- 
ing faith in the future of this great republic, politically, finan- 
cially and industrially. But in the overcapitalization of our 
industrial system there is a deepseated point of weakness which 
has been more or less overlooked because of our great prosper- 
ity. No particular strain has yet been imposed upon this part 
of our industrial machinery; yet it is so glaringly weak and 
defective that no great wisdom is necessary to tell us that when 
the next business crisis comes, its worst effects, financially, will 
fall upon the industrial department of the stock market; bring- 
ing disturbance not only to our finances, but to industries which 
are vital to the country. 

Many of our great industrial establishments are splendidly 
managed as business concerns. But their financial structure is 
unsound, and the sooner their reconstruction, which must come, 
is begun, the better for all concerned. While the penalties of 
defying economic law may be postponed or passed on to others, 
they cannot be forever averted. The day of reckoning, polit- 
ically and economically, must come. Nature's laws are inex- 
orable, and the effects of their violation are already seen in the 
social and political tendencies of the time. Happily, the days 
of overcapitalization are over, and an aroused public opinion 
will no doubt soon be crystallized into prohibitive laws. Presi- 
dent Roosevelt, who is leading this reform movement, might do 



OVERCAPITALIZATION 413 

well to turn his attention to the industrials, where the evil of 
overcapitalization is grosser and more of a menace to American 
institutions than in the case of the railroads. 

The evil of overcapitalization of railroads, which this article con- 
cedes to have been inevitable in the past, it denounces as impossible 
in the future, under the influence of matured public opinion. In the 
early days railroads were required to develop both population and 
traffic. They had to be constructed across thousands of miles of 
almost uninhabited territory, and could only be expected to pay in 
the dim and distant future. Under such uninviting conditions capital 
had to be tempted by very great prospective profits. Government aid 
in money was followed by immense grants of land, and then came 
stock-watering and overcapitalization. The adverse conditions then 
existing are supposed to justify or at least excuse the overcapitaliza- 
tion and other evils which mark the first development of railroads 
in this country. While regarding overcapitalization as one of the 
greatest of these evils and indefensible, it is supposed to have been 
an expedient which served its purpose in raising capital for early 
railroad development. But Mr. Clews offers neither defence nor 
apology for it. It is contended, however, that very much of this 
overcapitalization has been wiped out by reconstruction. Many mil- 
lions of railroad capital were literally wiped out during the year 
ninety-seven. Also the increased value of terminals and other proper- 
ties has served to eliminate much of the water, and has conferred 
value on shares which at one time were entirely valueless. 

Mr. Clews discusses the many evils which have marked railroad 
development in the United States, without differentiating the great- 
est of them all, which, however, he does not fail to mention. 

The greatest of all these evils, greater even than overcapitalization, 
is the monopoly of land which has resulted and must continue to 
result from the enormous areas granted by government to the first 
railroad constructors. These bold and venturesome capitalists de- 
served very great rewards, and it would be foolish and wrong to 
deprive them of very much higher inducements than those which are 
sufficient to secure capital in ordinary enterprises. But nothing can 
justify a nation in giving away the fee simple of its highways. The 
railroads are the highways of the nation, and neither the land occu- 
pied by the roadbed nor the lands contiguous should ever be allowed 
to become the private property of a corporation. While the evil of 
overcapitalization is becoming less and less, and may be expected 



414 OVERCAPITALIZATION 

ultimately to die out, the evil of land monopoly created by the im- 
mense grants of land to railroad companies will increase year by 
year in perpetuity. These great areas owned and controlled by rail- 
roads will continue to be a serious impediment to agricultural and 
industrial development. Their increasing values represent the power 
of the railroads or the land companies holding under them to levy 
taxes in the form of rent, on settlers and on the American people. 

We cannot escape the results of this violation of economic and po- 
litical justice. In treating the proposition that overcapitalization is 
a less menacing evil in railroads than in industrial concerns, Mr. Clews 
distinctly recognizes the inviolability of economic law. These are his 
wise words: "While the penalties of defying economic law may be 
postponed or passed on to others, they cannot be forever averted. The 
day of reckoning, politically and economically, must come. Nature's 
laws are inexorable, and the effect of their violation is already seen in 
the social and political tendencies of the time." — Note by the editor 
of " Government." 



THE ADVANTAGES OF AN EXPORT TRADE 
Contributed to " The Exporters' Review," December 15, 1907. 

THE recent financial crisis, strange as it may sound, has 
been the outcome of too much prosperity in this coun- 
try. Too much money has been put into real es- 
tate and other non-productive ventures and our manufacturers 
have been enlarging and improving their plants and turning out 
more goods than the domestic demand could absorb. This has 
resulted in an over-stocked market and a consequent depression 
of prices, coupled with an inability to realize on unwise invest- 
ments when the crisis came. 

A wider demand for our goods abroad would have regu- 
lated the over-production and thus steadied prices besides caus- 
ing a steady inflow of gold from foreign countries, to replace 
the industrial investments here. As it was, however, we were 
enabled to draw on Europe to the extent of $100,000,000 for 
goods actually sold there. This has not been sufficient to place 
business here in its former position and we shall probably call 
upon the rest of the world, through Europe, for still more. 

A great many people think that Europe sent us this gold 
to help us out. This is not so, however, as it was only sent 
here to pay for actual purchases. It was as absolutely neces- 
sary for them to have our wheat and cotton as it was for us 
to have their gold. It was a case of " exchange is no robbery." 

Our foreign balance this year will be very large and will 
probably be in excess of $400,000,000 before the foreign de- 
mand for our products ceases. We have been blessed with 
good crops, while Europe has had poor ones. This places us 
in the position of being able to demand still more gold from 
Europe, in return for our products. 

All of this points out the great advantage to the Amer- 
415 



416 THE EXPORT TRADE 

ican producer of having foreign markets. And j ust now Amer- 
ican manufacturers stand the best chance in the world for in- 
creasing their sales abroad. Our superior up-to-date machinery 
should help us wonderfully in this direction in meeting such 
competition. 

American manufacturers do not hesitate to throw away 
old machinery for the purpose of gaming competitive advan- 
tages. For that reason they are able to meet the demand of 
foreign consumers better than the English who are more con- 
servative and are averse to changes which involve expensive 
machinery. American manufacturers strive to suit their for- 
eign customers in the same manner they cater to local demand, 
so our continued success in export trade is assured. 

The present conditions in the manufacturing industries 
here will result in great benefits to the nation, despite recent 
losses, if it only points out to the American manufacturers the 
value of foreign markets. 

Our export trade for the ten months ending October 30, 
1907, shows an excess of exports over imports of $293,000,000. 
This is certainly a good showing, but the proportion of strictly 
manufactured goods in this total, although increasing, is not as 
large as it ought to be. 

We can hardly claim much credit for being able to sell 
our wheat and cotton to Europe. Argentine and India can do 
the same thing. The demand comes to us without the asking. 
We should also be able to largely increase the sale of our man- 
ufactured goods to other nations. 

There has been a noticeable rallying tendency in many lines 
of trade, especially in the export trade, the total value of our 
exports for the first ten months of this year having amounted 
to the enormous sum of $1,512,000,000. 

It is imperative that our manufacturers should seek to in- 
crease our export outlet for their surplus, and they should not 
delay about doing it as speedily as possible If our manufac- 
turers delay and allow England and Germany to obtain the 
first orders from foreign buyers, it would be much more diffi- 
cult to get the latter to take our goods afterwards. The export 
business we now have is permanent, but it is necessary to ma- 
terially increase it for the country's good. 



HARRIMAN 

Contributed to "The Alcolm" Magazine for October, 1909. 

A FEW hours after the announcement of the death of 
Edward H. Harriman, the question was put to me as 
to what history would record as the dead railroad man's 
dominant characteristic. Was it desire for great wealth, great 
power — or just to work? 

To men who know Mr. Harriman's life, to men who may 
comprehend his wonderful achievements, to men who have the 
ability to even scantily realize the length and breadth and 
height of his absolute authority at the hour of his death there 
can be but a single answer to this question — POWER. 

Power is the one word that illustrates Harriman's ambition. 
And it needs no qualifying or embracing adjectives, for power 
is more than the one word, it is the only word. It does not 
describe Harriman's ambition — it was his ambition. Power, 
unbridled, unchecked, unquestioned. It was for this that Har- 
riman gave his life — and, so far as man will ever know, he 
regretted it not. 

This force that Harriman craved with an almost unthinkable 
desire is a thing far greater than the domination acquired by 
the political boss, or the authority granted to industrial leaders, 
who may have absolute control, within certain limits, or even 
to the magnate who buys his strength with gold and who knows 
his position by the holdings locked in his strong-box. 

The power that Harriman held was wrung from Circum- 
stance and torn from Fate. Many great men have been the 
heads and controlling forces of vast organizations; some finan- 
cial, some industrial, and some political — but at most have 
they been the dominating heads. Harriman was the thing it- 
self — he was the organization. When Harriman was in at- 
417 



418 HARRIMAN 

tendance at directors' meetings he was the quorum; when he 
met in conference with others, he was the majority; when he 
issued an order it was nothing less than the breath of the 
execution. Harriman never conferred except as he knew what 
the termination of the conference would be. 

Five years more of life (probably less) with growth in au- 
thority equal with the five years past, Harriman would have 
had a control beyond that which all the laws of the land could 
give the President of the United States — for Harriman was 
a law unto himself. But with all that he gained in power no 
records will ever show that he stooped to conquer. There was 
no abasement that triumphs might result — for triumph was 
an unseemly word to Harriman and one indicative of weakness. 
Others might have the glory, the honors, the adulations — he 
demanded power. 

Fate and Circumstance served this man through life, though 
shortening it all the while. He had the foresight and energy, 
without the physical strength, of Roosevelt; the deductive abil- 
ity of Cleveland; and the steel-cold decisiveness of Rogers. 
He lacked the perfectly reasonable human feeling that Roose- 
velt has for appreciation; he lacked Cleveland's ability to hear 
the call of Nature when rest was all important that yet greater 
work might be accomplished; and he lacked Rogers's ability to 
fascinate. Harriman's perception was little short of marvelous, 
his decision was irrevocable — and action meant accomplish- 
ment, more certainly, it almost seemed, than human limitations 
should control accomplishment. 

That there can never be another Harriman is practically a 
foregone conclusion. That there never should be another Har- 
riman is a certainty — and yet, what he has accomplished is 
in the largest sense constructive. Dominant by nature, he in- 
creased this quality by practice. Wherever he went he was 
felt, his requests always took the form of commands. 

Never looking for, apparently never desiring, public ap- 
plause; shrinking from notoriety and scorning to soften his 
statements that they might come more pleasingly to the ear 
of the people, yet he wished to gain after death that which 



HARRIMAN 419 

he evidently held so cheap in life — a goodly recognition. In 
action he craved power above all other things and only in 
death will he reveal the more human and the broader side of his 
nature. 

I question if ever a man has lived whose first-hand knowl- 
edge was so certainly the base of his power as was the case 
with Mr. Harriman. In contrast with so many great leaders 
who have achieved in some large undertaking, Harriman not 
only knew enough of the work before him to choose the men 
for the jobs, but he knew the jobs so well he could have held 
down any one of them himself. And so he could tell if the 
men selected brought every ounce of efficiency into the organ- 
ization that their departments contained. And how he knew 
his men! He knew them so well he could ignore them. His 
methods lost him much in friendship, but never in service. 

His knowledge might be termed general when based on the 
great problems involved in finance and industry, and yet it was 
intensely specific when questions arose that related to any 
branch or channel of these subjects. In short, his knowledge 
was practical, based on fundamental principles and proven by 
experience. He knew finance because he had the terrific train- 
ing that came with the controlling of scores of millions while 
it was in the most active service. He knew so much more than 
how to get money — he knew how to use it, to safeguard it, and 
to make it increase. Even his speculation seemed little less, in 
its certainty, than an investment, though so productive as to 
astound the wildest plunger. But finance was nothing more 
than his chief tool, for Harriman was a master railroad builder ; 
and if he knew finance well, he knew the railroad better. He 
needed money for rights-of-way, for laying tracks, building 
bridges, tunneling mountains, erecting stations, and adding 
other thousands to the many thousand cars in service. Also 
he needed money for the purchase of railroads that other men 
had and to which he was prone to take a fancy. 

We have no record of Mr. Harriman ever explaining why 
he went into the railroad business. However, it would be hard 
to conceive of any other real reason than that he saw in it 



420 HARRIMAN 

the most gigantic activity in the world. Finance pleased him, 
because it was a means to an end, railroading fascinated him, 
because through it he could realize that end. He built with 
a fury, for he knew that the man who built, and retained con- 
trol, must be stronger than the man who destroyed and only 
gained in strength in comparison with the weakness of others. 
Finance and railroading seemed to him to be the strongest 
combination offered by any or all pursuits, and as he welded one 
to the other he found they could be made his servants and that 
they could bring him to the goal for which he longed — Power. 
Toward this end he worked and set the example for the thou- 
sands who worked for him. But all the time his ambition 
cried for greater energy, until he reached the position where 
he, who had thrown off the domination of all others, named 
the price of his servitude. He offered his freedom in exchange 
for Power's birthright. 

For fear there are those who will misunderstand my state- 
ments that there will in all probability never be another Harri- 
man, and that there should never be, some explanation seems 
advisable. As a nation we have come to realize that there 
must be other limitations placed upon the position a man might 
attain to, aside from those of his own ability, energy and years. 
The examples of one-man control over interests that directly 
involve thousands of his fellows, and often, indirectly, the 
entire country, that we have had in the last decade have 
opened our eyes to the fact that too much responsibility is not 
good for one man — and less good for those affected. It is to 
the end of providing against a repetition of such a situation 
that our law-makers will doubtless act within the very near 
future. So, however much a man's ability and genius may spur 
him on to greater conquests, there will be a limit put upon the 
extent to which his influence over the direct, personal welfare 
of others may grow. Harriman's career is the last word on 
this subject, for he increased in strength to a degree never be- 
fore reached. 

In fact a moment's consideration of the power this man has 
held within his grasp will show by what he could have done, 



HARRIMAX 421 

as well as what he has done, that no one should ever again be 
allowed such absolute command of holdings that influence the 
prosperity of the whole nation. There is no question but that, 
during the last several years, Mr. Harriman might, at any time, 
have brought on a panic that would have been nothing less 
than a national disaster. Why it would have directly affected 
those far away from financial districts, is shown in the fact 
that the panic would have been more than financial, in fact 
very decidedly industrial. 

Had the market gone against him when, in 1906, he downed 
his opponents in a golden flood that took from the Union 
Pacific treasury a hundred and thirty million dollars, such 
chaos might easily have resulted as to disrupt that gigantic 
system of railways. And yet more than twice that sum was 
within Harriman's grasp. For it was through his almost dia- 
bolic skill as an operator that the Union Pacific owned two hun- 
dred and ninety-five millions in gold and gilt-edged securities. 
All that fabulous wealth was so completely within his control 
that Mr. Harriman could have shipped a large part to foreign 
countries, England, France Germany, South America, Japan and 
elsewhere and then tied up the balance in this country by send- 
ing large sums to different points so as to be virtually out of 
general use, had he desired to do so unreasonable a thing, and 
created a disastrous panic at his will. Such absolute disposi- 
tion of the money of thousands placed in the hands of one man 
is hazardous in the extreme. 

As to the projects Mr. Harriman had under way at the time 
of his death it is doubtful if many aside from those relating 
to the internal organization of the Union Pacific will for some 
time at least be consummated. His ardent hope to add to the 
Union Pacific the Vanderbilt New York Central has un- 
doubtedly for the present passed with the passing of the man. 
Also the change in control of the Erie, that appeared to be 
so gradually developing through the influence of the securities 
of that road held in the name of the Union Pacific, by Harri- 
man, will doubtless take another turn, or remain stationary. 
That the death of one man could have such certain effect on 



422 HARRIMAN 

the railroad map of the country seems out of gear with possibil T 
ity; but had this builder's lease of life been extended a very 
few years there would surely have been a transcontinental rail- 
way system — and it would have been known as Harriman's. 

These conditions, in a broad sense, must be considered en- 
couraging for the future of American securities, and especially 
for the estimation in which they are to be held abroad. It 
is most essential that our railroad shares represent properties 
and not men, and that such properties should not be managed 
from the Wall Street standpoint, nor from the necessities of 
personal speculation. That Mr. Harriman's operations were 
almost always of a constructive nature came from the fact that 
his well-nigh superhuman ability to plan in harmony with the 
demands of the future proved to him that a builder's policy 
would bring him larger control than any other. However, the 
means he chose to gain his ends were distinctly Harrimanesque ; 
which is another way of saying that the laws of precedent and 
custom, the position of friends and supporters, and the holdings 
of thousands of weak ones were all without consideration if 
they stood in his path of conquest. By this same sign it is evi- 
dent that, while his success has been constructively gigantic, 
his risks have been equally great. 

His determination and resourcefulness more than once de- 
moralized the market — though his genius never failed to ad- 
vance him, even in times of disaster. When Stuyvesant Fish, 
his old friend and the one man of whom it could be said, " he 
made Harriman," stood in his way as president of the Illinois 
Central, Fish was wiped out of office. When he had finished 
with young James Hazen Hyde and his Equitable millions, 
Hyde was angered so that he resigned, which happened to be 
an easier course for Harriman, just then, than to have him 
turned out. Yet Harriman believed that his own progress was 
more important than friendship and of greater value than a 
recollection of past services. 

It is the contradictoriness of Harriman that makes it diffi- 
cult to form a fair estimate of him. Those who hark back to 
the means he used and are too small to see beyond them to the 



HARRIMAN 423 

result obtained, have nothing but uncontrolled condemnation 
for this man. Yet Harriman was so great that even anger 
was his servant. Again, there are those who, being by nature 
hero-worshipers, and those who have good reasons to be pleased 
with Harriman's results, whatever the means to obtain them 
might have been, are to-day giving voice to unbounded praise. 
But who can give an estimate of this man? Who is there that 
knew him better than he knew himself? 

If there is a man of the right dimensions to sit in the dead 
chief's chair, he might be able to tell us of the real Harriman; 
but this seat on the summit of railway control was hewn out 
by the man who used it — and to fit himself. He left a won- 
derful organization, so wonderful, in fact, that it could run 
itself far better than it could be controlled by a man of small 
calibre. 

The man who passed was great, so great that the commerce 
of a Nation stood still for five minutes out of respect for the 
body that his soul had left on earth. 

It must however be taken into account that Mr. Harriman 
was not alone in his great deals. He had a syndicate of six 
members. Of course he was the head and front of it and the 
moving spirit, but he was backed by five of the strongest and 
most influential capitalists and most courageous men in the 
community, which made him all-powerful. Without that back- 
ing he could have accomplished comparatively little. While he 
has gone, the other five remain and may be expected to work 
together in the market and in connection with the so-called 
Harriman enterprises. This means a good deal in the adjust- 
ment of the situation now that it has become ex-Harriman. No 
man is so big but that a combination of men can be found to 
take his place, if it is warranted by the prospects ahead and 
justified by anticipated large gains. 



ADDENDA 



INTRODUCTORY REMARKS 

By the Author, as Presiding Officer on the occasion of the Twelfth 
Annual Commencement Exercises of the Rhode Island Commercial 
School at Infantry Hall, Providence, R. I., Wednesday evening, June 
29, 1910. Introducing to the audience the Honorable Leslie M. Shaw, 
former Secretary of the Treasury. 

THE distinguished guests and Graduates of the Rhode 
Island Commercial School — Ladies and Gentlemen. 
It is a great pleasure to respond to the request to pre- 
side on this auspicious occasion. Since I last talked to a grad- 
uating class here, I have addressed nearly one hundred thou- 
sand students of Universities and Colleges, including the high 
schools in New York City and the adjacent towns of Long 
Island, New Jersey and Connecticut, and had supposed that 
my appearance before an audience assembled to hear evidence 
of the good work of our coming men and women was, for 
this season, a thing of the past. 

I love however to mingle with young people and if I have 
in my addresses been able to point out to the rising generation 
the path that leads to success, which has been my aim — I 
will feel that my time has been well spent. 

The Eastern States have truly claimed to be the original 
home of the public school, and the excellence of these elemen- 
tary seats of learning has been well maintained. 

This and other private schools and colleges are famed all 
over the nation and can well lay claim to the highest order of 
merit. 

I had not positively expected to be able to be with you to- 
night until a few hours ago as I thought that my duties as 
a member of the World's Fair Special Committee very re- 
427 



428 INTRODUCTORY REMARKS 

cently appointed by Mayor Gaynor of New York City would 
prevent my attendance. 

Aside from the pleasure of meeting you. I have the honor 
of introducing to you a warm, personal friend who in public 
and private life has made good. I consider the gentleman 
referred to one of the best Secretaries of the Treasury this 
country has ever had. I know of no greater compliment to 
any man than to say of him that he stands on the same high 
plane with those who have financed this country in times of 
trouble and stress. He was both courageous and resourceful, 
especially in times of panic, and frequently by his wisdom 
and tact saved the nation from disaster. As a public officer 
I honor him. As a friend I esteem him, and I take the great- 
est pleasure in introducing to you the Hon. Leslie M. Shaw. 



AMERICAN CITIZENSHIP 

An Address Delivered at the Annual Commencement of the State 
University of Kentucky, Lexington, Ky., on June 2, 1910. 

IT is with much pleasure and the highest appreciation of the 
degree conferred upon me that I thank the University of 
Kentucky for so great an honor. I am proud to accept 
it, for I value it beyond price, coming as it does from a uni- 
versity so old and famous, and at the hands of its president, 
who is, himself, the dean of all our American university presi- 
dents. He occupies a unique distinction among them in hav- 
ing been for forty-five years the president of this great 
institution, dating back to its small beginning, when it was only 
a university in embryo, with a very perplexing and discourag- 
ing future. Of course, you all are familiar with its eventful 
history, so I shall not attempt to speak of it in detail. But 
I take pleasure in bearing witness that it reflects the highest 
credit, not only on your distinguished president, who fought 
and won its battles, but upon all concerned in its upbuilding, 
as well as on the good old State of Kentucky. Hence, I fore- 
see a vast extension of its influence and usefulness with time 
and the growth of our population — a growth that will add 
enormously to the number of its students and correspondingly 
increase its faculty, its buildings, its equipment and its mone- 
tary resources, making it more than ever the pride of Ken- 
tucky and swelling its national fame. 

Besides being proud of their State University Kentuckians have 

i Portions of the above address were embodied in an address on 
American Social Relations, delivered before the students of Yale 
University, at New Haven, on Nov. 1st, 1907. 
429 



430 AMERICAN CITIZENSHIP 

good reason to be proud and grateful for their natural inher- 
itance. Our army statistics show that soldiers enlisted in Ken- 
tucky and Tennessee have always been of greater height and 
weight, and also of circumference of head and chest than the 
soldiers of any other State. The soil of Kentucky is unrivaled 
in fertility, and, while it leads in tobacco and hemp growing, 
its agricultural diversity is such that it can produce cotton, 
corn and wheat, and almost every other agricultural product in 
abundance. Its soil may be said to " laugh in harvest when 
tickled with a hoe," and its natural resources, both agricultural 
and mineral, are not yet half developed. 

Since the days of 1769, when Daniel Boone led a hunting 
party from North Carolina into " the unexplored region beyond 
the mountains," now known as Kentucky, and built block 
houses as a fort at Boonesboro, that region has been growing 
up with the country and making history that does honor to it. 

In 1792 Kentucky was admitted as a State into the Federal 
Union, and in the Mexican War, in 1846, Kentucky troops bore 
a leading part, 13,700 of its men having volunteered to serve. 

Kentucky has an additional claim to distinction in the fact 
that Abraham Lincoln, the great emancipator and savior of 
the Union, was a native of its soil. In the struggle and hard- 
ship of his early boyhood in his native State there was de- 
veloped within him the adamantine characteristics of greatness 
that afterwards distinguished him in his political career in 
Illinois and made him eventually the foremost man of his time 
in this or any other nation. But to Kentucky he owed his birth. 
All honor to Kentucky for giving us Lincoln! 

There is vast room for energy and talent in the development 
of the South. It presents an illimitable field, and none is so 
well fitted to cultivate that field as the educated young men 
and women of the South represented by the graduates of both 
sexes from this grand institution of learning. With all mat- 
ters connected with this State I have the heartiest sympathy, 
for my wife is the great-granddaughter of your former Chief 
Executive, Governor Slaughter. She feels proud of her Ken- 
tucky blood, and, sympathetically, I almost feel like a Ken- 



AMERICAN CITIZENSHIP 431 

tuckian my self , and want to sing about " My Old Kentucky 
Home." 

Nearly fifty years have passed since the great struggle be- 
tween the North and the South, and, thank God, in that interval 
of time all bitterness and sectionalism have been succeeded by 
friendly feeling and respect. 

To-day the men who wore the gray and those who wore the 
blue are decorating the graves of the heroes who fought each 
other from 1861 to 1865. Enemies they were, but heroes all, 
and we now look upon them all as Americans who died in de- 
fense of what their consciences approved. 

Since those sad days many of the young men from the North 
have wooed and won fair daughters of the South, and many a 
Southern youth has taken a bride from the North. Many of 
the children of these marriages have grandfathers who were 
once enemies, but now are bound together by the holiest bond — 
the prattling infants who call them Grandpa. 

Another factor in the bond of peace is that Northern capital 
has been and is seeking and finding employment in the States 
south of Mason and Dixon's line. Intermarriage and a unity 
of financial interests are powerful allies in the sentiments that 
tend toward brotherhood in our American young ladies and gen- 
tlemen. 

You are now on the threshold of American citizenship and 
'have good reason to be proud of the prospect before you, with 
its unlimited possibilities. 

Surely it is a privilege that you all value, and can hardly 
over-value, that of becoming American citizens, and thus form- 
ing a part of this free and glorious Republic, where the gates 
of opportunity are thrown wide open to you, and the golden 
harvest of success stands ready to be reaped by the worthy and 
deserving, who are able and willing to do good work, and work 
hard in their chosen calling. I may reasonably predict that 
some of you will become leaders of thought, trade, science, lit- 
erature or art, and that will be your ample reward. I base my 
prediction on the fact that you did not come here because you 
were compelled to, but because you had a thirst for knowledge, 



432 AMERICAN CITIZENSHIP 

for information, or suggestions that might be of use to you in 
this connection, and were willing and anxious to work hard to 
attain what you desired. The first requisite to attain success 
in any form is this willingness to study and work for what you 
want, so, being equipped with this necessary quality at the 
start, you are prepared to make headway in the battle of life. 

The pessimist is abroad in this fair land of ours, in these 
days, preaching the gospel of discontent, and a favorite text 
is that the young man has now no show, or little chance to get 
on in life. Do not be misled or discouraged by such a false 
doctrine. There never was a time when brains were at a 
greater premium than at present, nor courage, education, indus- 
try and energy more requisite or in greater demand. The 
harder you have to struggle to complete your education, the 
better fitted you will be for that battle of life, for in your 
youth you will have attained victory over the obstacles which 
lie in the path of success. 

Disappointments may embarrass you, but you must conquer 
them, instead of allowing them to conquer you. Every vic- 
tory thus won will be an incentive to further efforts and achieve- 
ments, and will provide a stepping-stone to success. 

Right here, let me impress upon you that the foundation 
stones of real success in life are industry, honesty and truth- 
fulness. These are jewels which everyone can possess, if he 
cares to. Do not be honest because it pays, or as a matter of 
policy. Be honest because you are conscientious, and it is 
right to be honest and a reproach to be dishonest. A man who 
is honest and truthful in all things is the highest type of man- 
hood, and commands respect in every walk of life. 

While you are still young, I advise you to have an ideal. 
Make up your mind what you are best suited for, and strive 
with all that is in you to perfect yourself for the work of such 
a position or profession. 

While it is the almost universal desire to become rich, re- 
member that there are other things in life more to be desired 
than great wealth. 

Few of the great authors, scientists, professors or inventors 



AiMERICAN CITIZENSHIP 433 

have been wealthy men, yet they were great public benefactors, 
and their names will live in the pages of history long after the 
very rich men of the world have been forgotten. 

Learn well the history of your country. Study the science 
of Federal, State and Municipal government. Study also 
finance and banking. Whether you go into Wall Street or not 
it will be useful to you. When you leave this great university, 
try to inform yourselves on all the subjects that will make you 
useful citizens, as well as competent, practical workers. School 
yourselves to be polite and courteous under trying circum- 
stances. Politeness is one of the strongest allies one can have 
in his dealings with his fellowmen. It is not only so in my 
field of activity — Wall Street — but everywhere. 

Continue to read only good books. Libraries are now so 
plentiful that — even if you have not one of your own — good 
books are within reach of all. 

While you are improving your minds, take good care of 
your bodies. You are not yet too old for me to give you points. 
Exercise all you can in the open air. Cleanliness of body, and 
neatness of dress, even if you are not millionaires and your 
clothes are threadbare, will often be taken as a guarantee of 
good character. Be thrifty and economical, even if you can- 
not equal Russell Sage, and never get into debt if you can 
help it. 

Strive to learn to do some one thing in the line of your 
studies better than anyone else can do it, and you will have a 
specialty to recommend you to a chosen career. Whatever you 
attempt to do, do it with your whole soul — as Mr. Roosevelt, 
our strenuous and gifted ex-President, said: "Buck hard and 
hit the center of the line." 

If you live in a city, do not think the country is less attrac- 
tive, and has no chance to grow like a town. The State of 
Texas alone could give to every man, woman, and child in the 
whole world a full-sized building lot 20x100, and then, al- 
lowing for public highways, have over one-third of the area of 
the State left for the production of food supplies. The West, 
the Southwest, and the South are yearning for newcomers. 



434 AMERICAN CITIZENSHIP 

Horace Greeley used to say: "Go West, young man! " The 
emigrants from foreign shores will some day realize that there 
is a welcome ready for them outside of cities. Colonies will 
be formed and men of intelligence will be needed to rule and 
advise the newcomers; and those of you who can speak a for- 
eign language will be well fitted for such a position. But you 
may aspire to the United States Senate, or to become Wall 
Street millionaires. 

The natural resources of our country are constantly being 
developed, and men of brains and courage will be sought to 
lead the armies of workmen. Every man cannot be a captain 
of industry, but a man of pluck and education need not remain 
a private in the ranks very long. Still, avoid that vaulting 
ambition that overleaps itself and falls on the other side. 

Whatever your calling may be, try to become your own mas- 
ter in your younger days. Nothing will give you so much self- 
reliance as the habit of relying on yourself. You may possibly 
fail at first, but great successes are often built on failures, if 
the one who fails will profit by the lesson. Bulwer Lytton tells 
us that in the bright lexicon of Youth there is so such word as 
fail. 

Now that you have graduated, do not imagine that your edu- 
cation is completed. Consider that you are just beginning to 
be able to learn, and that your college life has simply been 
a period of training to put you in condition for the real strug- 
gle for knowledge. Practice makes perfect in all the profes- 
sions. 

See to it that you acquire some new point in knowledge every 
day that will be of future value to you. This will mean 365 
good ideas acquired in a year, and every one of these ideas will 
be like money out at interest, or like seeds planted in good soil. 
They will blossom and bear fruit. 

Do not believe that all men in politics are rascals, or weak- 
lings, who can be bought for a price. If you have the in- 
clination, get into political life, and be a factor in the affairs of 
your district. Honest and truthful men will be most welcome 
in this field, and may be of great public service. 



AMERICAN CITIZENSHIP 435 

Do not be worried by the statements made by so many 
pessimists that society, and the country at large, are on the 
verge of moral bankruptcy. I tell you that the world is grow- 
ing better every day, and good men are held in greater respect 
than ever. Of course there are more rascals and more thieves 
in this country than there were fifty years ago, but that is be- 
cause there are far more people. The percentage of bad to 
good is relatively smaller. Men who do wrong are found out 
oftener and sooner than they were in the olden days, and the 
news of wrongdoing is carried all over the land by telegraph 
and telephone and published broadcast in the daily papers. 
A hundred years or so ago a man might commit a crime a 
thousand miles from New York and one could not get the news 
of it in a month, even if it was sent at all. 

Young men, I entreat you to use all your endeavors to sup- 
press the use of profanity or obscenity in public places or else- 
where. This is one of the crying evils of the day and our 
women are never safe from the insult of having to listen to talk 
that would not be tolerated in a first-class barroom. But, of 
course, the present company is excepted. You are all gentle- 
men and scholars. 

Be cheerful under adverse circumstances. Ella Wheeler 
Wilcox expresses what I mean when she says: 

" It's easy enough to be pleasant, 
When life goes by like a song; 
But the man worth while, 
Is the one who will smile 
When everything goes dead wrong." 

Whenever you see a chance to help a fellowman who is not 
as well equipped as you are, give him a lift. If you do 
so, you may forget it, but he never will, and you will secure 
a friend who will be looking for a chance to do you a good 
turn. 

An old clergyman used to preach that true religion consisted 
in doing something good each day, so that when one went to 



436 AMERICAN CITIZENSHIP 

bed at night, he could feel that the world was a little better, 
or some one a little happier, because he had lived that day. 

Chemistry is going to play the important part in the next 
twenty-five years that electricity has in the past quarter of a 
century. Fortune awaits any man who can make use of waste 
material. Millions of dollars' worth of this is thrown away 
every year because the mind of man has not as yet been able 
to solve the problem of utilizing it. Students are now at work 
to this end and who can tell but one of you may be the man 
who will play an important part in this great work of discover- 
ing new sources of wealth and progress? If so, he will find a 
bigger gold mine than Wall Street. 

Railroad magnates are on the watch for improvements and 
devices of any kind that will tend toward saving time, increas- 
ing facilities, lessening liability of accident, or saving in cost 
of construction or equipment. Here is a broad field for action 
and for fertile minds to work in. 

Surgeons and physicians now perform operations and effect 
cures that would have been considered miracles in my younger 
days, and still we find each year that they have much to learn. 
It is possible that I am now addressing some youthful savant, 
who will startle the world in the distant future by still more 
miraculous skill. 

Wherever you go, whatever you do, keep your eye on the 
star of Hope. Every man has his place in the world if he can 
only find it. Opportunity knocks at every man's door at some 
time during his early life. Look sharp and secure it when it 
knocks at yours, and grab it before it flies. 

But, to all I would advise that when you have found occu- 
pation, whether it be in the professions or not, strive to please. 
Don't expect to sit in high places at once. Remember that in 
the struggle of life now confronting you, you are in the junior 
class and can only graduate to a higher class by merit. Study 
well your surroundings and what is ahead of you. Carefully 
consider what may await you. If you see no evidence of a 
position worthy of your hopes, do not hesitate to make a change. 
It is better to change several times while you are young than 



AMERICAN CITIZENSHIP 437 

to waste your time by remaining where you cannot hope to 
achieve success. 

One of the fundamental principles of business is that civility 
costs nothing and always pays good dividends. Very often 
the temptation will come to you in dealing with a nervous or 
cranky customer or client, to give vent to your wrath or impa- 
tience. My advice is don't. To succeed in holding and pleas- 
ing such a customer is a high accomplishment, and sure to at- 
tract attention. 

The Almighty has endowed every man with two important 
allies, namely, courage and conscience. The latter can be 
blunted if not heeded, and an elastic conscience is worse than 
a wooden leg. Be cautious not to enter into any deal or occu- 
pation when your conscience warns you that you are treading 
on dangerous ground; but, having made up your mind that 
you are in the right, press forward with all the energy that 
is in you. If you do not succeed, have the courage to rise and 
try again and renew the struggle. Nearly every man who has 
made a great success in business life has, in his earlier years, 
suffered reverses. These failures have been lessons that have 
taught him the way to win. You may often be temporarily 
discouraged by seeing success come to the dishonest and un- 
worthy, but remember that such cannot command the respect 
of their fellows. There is more in life than " filthy lucre " ; 
a contented mind is more to be desired than great riches, and, 
if you are poor, be independently poor. Andrew Carnegie 
says that to die rich is to die disgraced, so guard against that. 

You are really now on the threshold of a new school — the 
school of life. As the old forest guides were taught their 
wood wisdom by the rocks, the streams, the grass, the leaves 
and kindred objects, so you will learn by actual contact with 
all the customs, rules and complex situations of the business 
world, what to do and what to avoid. 

Many young men are disheartened before they start in busi- 
ness by the fact that so many lines of manufacture are con- 
trolled by big corporations and "trusts." As I have already 
shown, they hear the talk of the agitator and discontented that 



438 AMERICAN CITIZENSHIP 

a poor man has no chance in life. Let me repeat that brains 
will always command a premium and that young men who have 
brains, backed by energy, will always be in demand. You 
must prove that you have these requisites by good work, and you 
will find capital will seek to combine with such qualities. You 
may start in business, or the professions, with your feet on the 
bottom rung of the ladder; it rests with you to acquire the 
strength to climb to the top. You can do so if you have the 
will and the force to back you. There is always plenty of 
room at the top. The men now at the top have their minds 
and hands full, and are eager to delegate to smart assistants 
some of their work so as to ease the burden they bear. Suc- 
cess comes to the man who tries to compel success to yield to 
him. Cassius spoke well to Brutus when he said: " The fault 
is not in our stars, dear Brutus, that we are underlings, but in 
our natures." 

Form the habit as soon as you become a money-earner, or 
money-maker, of saving a part of your salary, or profits. Put 
away one dollar out of every ten you earn. The time will 
come in your lives, when, if you have a little money, you can 
control circumstances; otherwise circumstances will control you. 
You may often have to practice self-denial to save ten per cent 
of your earnings; but compel yourselves to do so and you will 
never regret it. Most of the leading men in business life to- 
day started out less well equipped with worldly goods or edu- 
cation than any of you. What they have done at least some 
of you can do. 

See that the money you spend is well spent. By careful 
judgment in this respect, you will acquire a habit which will 
cling to you in after life. Many a man makes bad investments 
because he did not learn to be cautious in the beginning of his 
business career. 

The improvements in the past quarter of a century have 
been marvelous and the end is not yet. There are many new 
ideas being formulated, and some of you may bear an im- 
portant part in solving problems which will revolutionize the 



AMERICAN CITIZENSHIP 439 

world. Electricity and chemistry are perhaps still in their 
infancy, and latent forces are floating around unknown to man. 
The next fifty years may indeed witness changes just as great 
and startling as we have seen during the last fifty. 

I once advised young men to go as soon as possible into 
business. I have changed my opinion somewhat and think that 
it is well to get a technical training in a business at a college 
where special courses are taught. I still consider, however, 
that if a young man is to enter Wall Street he will learn just 
as much by going into the Street as soon as he graduates, and 
I consider a large office just as good as any business college, 
where a pupil can learn by actual experience as well as he 
could by a theoretical course in a business college. Almost 
every man in a leading position in my banking house has 
started as a junior clerk and gradually worked his way up. 

If you hold a fiduciary position in a bank, a mercantile busi- 
ness house, or a professional office, remember that the informa- 
tion you acquire regarding the secrets and inside facts of the 
business of your employers belongs to them alone and must not 
be divulged or spoken of to anyone. Very often you will hear 
of " tips " being circulated as inside information. Never put 
faith in such tips, as an employe who would give away the 
secrets of the firm he works for would be unscrupulous enough 
to lie to you, and I warn you not to make a close friend of such 
a person. Do not think that I look upon you as children in 
tendering this piece of advice, but rather as a veteran address- 
ing new recruits. 

The trait of tenacity of purpose is very often a natural gift ; 
but if you have not this persistence by nature you must culti- 
vate it. For, with it, you can succeed, you can make difficul- 
ties bend, you can make opposition give way, and doubt 
and hesitancy yield to confidence and success. Without it the 
more shining qualities of your nature will not insure your suc- 
cess, nor avert failure and disaster. 

At the time the Suspension Bridge over the Niagara river 
was to be erected, the great question was how to get the cable 



440 AMERICAN CITIZENSHIP 

over. A kite was elevated, which, with a favoring wind, 
alighted on the opposite shore. To its insignificant little string 
a cord was attached, which was drawn over, then a rope, then 
a larger one, and then a cable; until the great bridge between 
the United States and Canada was completed. 

First across the gulf we cast 
Kite-borne threads till lines are passed 
And habit builds the bridge at last. 

In like manner, my young friends, our whole character is 
made up of little things, of threads and strands and ropes of 
habit. Let us be sure that they are always good and sound. 

And now a word for the young men only. Next to the un- 
wisdom of selecting and following bad or incompetent advisers 
in matters of business, there are also certain persons whom, if 
you wish to do well and make a fortune honestly, you should 
be careful to avoid. You will not always know them by their 
appearance; in fact, that is often the worst rule to go by, for 
they are generally well disguised. It is in their manner and 
conversation that you will find them out, and, that this be the 
easier, I have made a collection of their characteristics, as fol- 
lows: 

Avoid a man who vilifies his benefactor; 
Who unjustly accuses others of bad deeds; 
Who never has a good word for anybody; 
Who, when he drinks, habitually drinks alone; 
Who boasts of the superiority of his family; 
Who talks religion downtown in connection with his daily busi- 
ness affairs; 
Who talks recklessly against the virtue of respectable women; 
Who runs in debt with no apparent intention of paying; 
Who borrows small sums on his note or check dated ahead; 
Who will not work for an honest living; 
Who looks down upon those who do; 
Who is always prating about his own virtues; 
Who imputes bad motives to those trying to do good; 



AMERICAN CITIZENSHIP 441 

Who betrays confidence; 

Who lies; 

Who is honest only for policy's; sake; 

Who deceives his wife and boasts of it to others; 

Who chews tobacco in a public conveyance; 

Who gets intoxicated in public places; 

Who partakes of hospitality and talks behind his entertainer's 

back; 
Who borrows money from a friend and then blackguards the 

lender. 

With a population of ninety-one millions, which this coun- 
try now has, it is easy to find associates in life without selecting 
men possessed of any of these characteristics and life is the 
better worth living without them. 

You will both save and make money by strict observance of 
this short catalogue of men to avoid. You are not called upon 
to do anything or to risk any money in the exercise of this dis- 
cretion. It simply consists in letting such people severely 
alone, and if you have been in the habit of being imposed upon 
by such characters, you will find happiness, as well as your 
cash, greatly increased by prudently avoiding them. 

There is another subject of signal importance to which I in- 
vite your earnest attention. 

You must ever bear in mind now that you have become citi- 
zens, that you will possess certain rights and privileges — such 
as the elective franchise and equality before the law — and 
there are, as well, sacred obligations and duties imposed upon 
you, as citizens, that should be faithfully regarded and per- 
formed. 

To properly understand and appreciate these duties, you 
should, I reiterate, make a careful study of our system of gov- 
ernment, and more fully acquaint yourselves with the manner 
in which municipalities, States and the Nation are governed. 

As you mature, attend political meetings, and read and dis- 
cuss economic questions of the day; for public discussion is 
one of the best quickeners of individual thought and expression. 
Be prepared, when the time comes, to actively participate in 



442 AMERICAN CITIZENSHIP 

the affairs of your city and State as well as the nation, and 
stand always ready and willing to lend your aid to the uplifting 
of the government to the highest ideals of Democracy, or Re- 
publicanism, as you see them. 

If I should add a further word of advice it would be an 
appeal to you to ever cherish, deep in your hearts, undying love 
of country. 

Not only be ready to defend it with your lives, but con- 
stantly cultivate and encourage the inspiring qualities of civic 
pride and virtue, so that your whole future career will reflect a 
sincere and patriotic affection for and just appreciation of the 
noble institutions of our great republic. As, however, you are 
doubtless all true patriots, this advice may be uncalled for. 

And now to the young ladies — God bless them. Do not 
think, because my remarks have applied largely to the young 
men, that I have intended to overlook you. I have given the 
gentlemen lots of advice — they need it more than you do, and 
a man as young as I am is naturally diffident in the presence of 
the fair sex. 

There never was a time in the history of the world when 
the women had such opportunities in life as our country af- 
fords today. Never have they commanded such respect in busi- 
ness or professional life. While I am not foolish enough to 
suppose that many of the fair ones in this audience will ever 
have to be self-supporting, there may be some exceptions. If 
you should, either from desire or necessity, enter business cir- 
cles, you have an education that puts you on a higher plane 
than the great majority of business men can attain. If your 
ability equals your knowledge, you have a brilliant prospect for 
the future. If you marry young, as most of you undoubtedly 
will, your education fits you to shine in the social world, and 
doubly fits you to rule in the home. It is in the home, and 
not in the college, that the seeds of knowledge are planted. It 
is the home influence that usually makes or unmakes the future 
man and woman. A good woman is the best gift of God to the 
world, and next to Him is entitled to our worship and adora- 
tion. 



AMERICAN CITIZENSHIP 443 

In conclusion, over and above everything else, I wish con- 
tinued success and prosperity to the State University of Ken- 
tucky ; and good health, fresh honors, good fortune and long 
life to its distinguished and honored President, upon whose 
presidency the university cannot be too warmly congratulated. 



INTRODUCTION BY DR. PATTERSON, PRESIDENT OF THE STATE UNI- 
VERSITY OF KENTUCKY. 

Upon the distinguished gentleman whose public spirit brought 
Wall Street to the aid of the republic when in the throes of a 
mortal conflict, brought order out of financial chaos, made pos- 
sible the maintenance of the Federal union, and who years 
thereafter laid the foundation of the fiscal system of the Em- 
pire of Japan, whose decoration worn by him to-day commemo- 
rates the gratitude of the youngest and one of the greatest of 
the great nations of the world, upon Henry Clews, financier, 
scholar, author, patriot, and philanthropist, the State Univer- 
sity of Kentucky, in recognition of his eminent service, his in- 
tellectual ability and moral worth, confers through me the hon- 
orary degree Legis Utriusque Doctor. 



NEGRO EDUCATION 

Address Delivered Before the National Negro Business League at its 
Eleventh Annual Session, at the Palm Garden, East 58th Street, 
Near Lexington Avenue, New York City, on Thursday Evening, 
August 18th, 1910, Dr. Booker T. Washington Being Chairman of 
the Evening. 

1MUST preface my short talk to you this evening, with 
an expression of my thanks for having been called upon 
by Dr. Washington to address you, and for the privilege 
of standing side by side on this platform with your great 
leader. 

For many years I have watched with pleasure his noble work 
in the uplifting of his people and have seen, with personal 
satisfaction, the grand results he has accomplished. 

No man in the world has done more — nay, has done as 
much — for the cause of negro education than Dr. Washing- 
ton, and it has been largely through the exercise of his fine 
intellectual powers that the negro race has gained so much in 
its reach for a high standard of excellence. 

It is this keynote of education of the race that rings out the 
true solution of the question of your future. 

In this glorious republic, with its broad opportunities for 
education, there is no excuse for ignorance. 

At this hour and stage of national and commercial advance- 
ment, there is a great and growing demand for both men and 
women who are intelligent: and though sometimes people will 
be deceived by those sailing under false colors, ignorance can 
never pass long for intelligence. 

Your success to-day, my friends, lies in the true elevation 
of mind that comes from proper education. 

Liberal education expands the powers and faculties of the 
mind: gives broader views, a more comprehensive judgment 
444 



NEGRO EDUCATION 445 

and prepares every man and woman to handle wisely the pro- 
found questions which constants arise to disturb the interests 
of society. It quickens the soul with new energy, directs its 
action, and enables it to pursue its end systematically and 
effectively. 

No man or woman who is ignorant, or confined to a very 
limited education, can contend with much courage and success 
either for their own rights or the rights of others. Just as a 
person confined to a plank with a fearful precipice on either 
side, cannot walk as boldly as one who treads on the broad 
highway. And to overcome the many obstacles — to bridge 
the ever present gully and deep abyss of difficulty, as they 
confront you in your onward and upward march, there is but 
one best guide — Education. However, by the term educa- 
tion, I do not mean, exclusively, the learning that comes from 
books, and schools and universities. The college has done 
grand and noble work in the elevation of the race, and the 
magnificent results will shine resplendent in future history. 

But, in giving my best consideration to your great cause, my 
friends, I would state that, in my opinion, it is equally as im- 
portant and essential to acquire that fuller education and 
standard of capacity that comes only from the careful study 
and observation of the people — their methods, their manners, 
and their varied adjuncts and attributes of success. 

It was Lord Brougham who once said that he learned more 
in a few years' travel abroad than in a curriculum of study 
covering eighteen years in Oxford and Cambridge. He met, 
studied and cultivated all kinds of people. 

In this great country — especially in this wonderful cos- 
mopolis of New York, you do not have to go abroad to acquire 
knowledge. The peoples of all the world are here in your 
very midst — making with yourselves one free United States 
of America. Study them hourly and constantly! Learn from 
their manners and methods the newest and best way to do 
things. This is a land of Individualism, whose gates are open 
to all. Forget that ever such a monstrous condition 'as Slav- 
ery existed. It never existed by right, for, from the mo- 



446 NEGRO EDUCATION 

ment of the birth of our government, the Declaration of Inde- 
pendence announced that all men are created equal and en- 
dowed by their Creator with certain inalienable rights — life, 
liberty and the pursuit of happiness. 

In the industries and business of your daily life — no matter 
what your station in life may be — carefully watch and study 
the habits and sterling qualities of the capable and industrious 
merchants and men whom you meet and whose achievements 
command the respect and admiration of the world. Educate 
yourselves in those superior qualities that gave them success; 
or 3 better still, strive to excel and produce greater results. 
Here is true Individualism! 

In your social life, acquire harmony with all that is best — 
all that is most American — for the " A No. 1 " American 
is the best type and example of them all! Cultivate the lan- 
guage and manners of the learned and refined! Always think 
before you speak! Measure your words and overcome all 
accent or peculiarity in utterance that tends to distinguish you 
from Americans generally. Any brogue can be corrected. It 
should be, for it is always a great handicap and hindrance to 
success. 

Whilst being always respectful, ever maintain your own 
self-respect. By your own act alone can you lose your self- 
respect ! 

I remember reading a few years ago a very admirable 
book — - written by our esteemed presiding officer — entitled 
" Putting the Most into Life." It told, among other things, 
of the qualities essential to success in school life, with a word 
to prospective teachers about putting the most into their work. 
It spoke, also, of industrial efficiency and the making of 
religion a vital part of living; but its strongest appeal, to my 
mind, was that for the making of the negro race life count 
in the life of the nation. It showed how each one of you can 
put much into the life of his race, by making his own individ- 
ual life present a model of purity and patience, industry 
and courage in showing the world how to get strength out of 
difficulties. 



NEGRO EDUCATION 447 

In most convincing words our learned author urged that in 
the face of discouragements and difficulties the negro must ever 
remember that nobody can degrade him. That the individual 
himself is the only one who can inflict that punishment. I am 
proud this evening to endorse all the words I have quoted 
as uttered by Dr. Washington as gems of wisdom and Gospel 
truth. 

It is stated that, at one time, that grand leader of the race, 
Frederick Douglass, was on one occasion compelled to ride 
for several hours in a portion of a freight car. A friend went 
into the car to console him and said to him that he hated to 
see a man of his intelligence in so humiliating a position. " I 
am ashamed that they have thus degraded you." But, Doug- 
lass, straightening himself up in his seat, looked the friend in 
the face and said, " They cannot degrade Frederick Douglass." 

My friends, in closing this brief address, I know of no more 
fitting advice to offer in addition to what I have already said 
than this: Follow the example of that great statesman and 
intrepid leader of the past, Frederick Douglass, and, also, the 
wise teachings of your living leader, Dr. Booker T. Washing- 
ton, and — always bearing in mind that you are true, patriotic 
Americans, be ready at all times to answer the call as such, 
and then, ere long, your race will reach its high place in this 
matchless republic, to which you all aspire. 



INDEX 



INDEX 



PAGE 

Aberdeen, Lady Ishbel, on Woman Suffrage 262 

Accountants, Public 4, 10, 16, 55, 181 

Accounts of Corporations, Publicity of.. 3, 16, 18, 25, 55, 63, 125, 126 

Agriculture, Source of Our Strength 108 

American Democracy to Influence the World 226 

Mercantile Marines The 211-224 

Bank, A Central, Reasons Against 299-314 

Would Become a Monopoly 37 

Would Dominate Wall Street 303 

Deposits, Government Guarantee of 151, 175-183 

of Banks, Not Needed 37 

Banking and Brokerage Houses, Closer Supervision of 180 

Development in the West and Southwest 30 

Methods, 17 

Banks, Boston, Their Soundness and Conservatism 102 

Postal Savings 309-314 

Barrett, John, on Decay of American Shipping 213 

Beresford, Sir Charles, on American Adaptability 105 

Bolles, Albert S., on Security of Bank Borrowers 7 

Boston, its Leadership in Literature 299 

Brougham, Lord, on Advantages of Travel 227, 445 

Bryan, William J., on Individualism 279 

on the New York Stock Exchange 113 

Bryce, James, his High Position in British Statesmanship 363 

on the Future of the United States 289 

Business, Reform in 15 

Education, Improved Methods of 8 

Increase of, in Universities 9 

Carlyle, Thomas, on the Ballot-Box 229 

Carnegie, Andrew, an American Object Lesson 116 

an Instance of His Enterprise. 105 

Notable for His Philanthropy 48 

451 



452 INDEX 



PAGE 

China to Become a Military Nation 95 

China's and India's Millions Under Japanese Leadership 95 

Cities, Congestion in 296 

Cleveland, Grover, Sketch of His Public Career 160-163 

Clews, Henry, on Persons to Avoid 440 

Corporate Interests in U. S., Immensity of 118, 305 

Corporation Secrecy 17 

Corporations, Honestly Conducted, a Public Benefit 53 

One-Man Power in 19, 420 

Political Influence of 127 

Regulation of 231 

Cotton Goods, Exports of Great Britain and U. S. Compared 107 

Crisis of 1907, The 69-88, 111 

— a Purifying Ordeal 115 

Causes of 87 

Currency System of U. S., The, its Improvement 154-156 

Dalrymple, Major, on Municipal Ownership 288 

Direct Primary Nominations 293 

Directors, Dummy 19, 20 

Dividends Passed and Reduced in 1908 160 

Douglass, Frederick, Anecdote of 447 

Eckels, James H., on Soundness of Assets 12 

Edward the Seventh, King 345-351 

Elastic Currency, An 12, 24, 35, 38 

Emergency Currency in Germany 23 

Law, The 132-137, 152, 182 

English Neutrality in Our Civil War 361-364 

European Combination Against China, Japan and India Predicted 94 

Federal Government, The, Corporations Ambitious to Control 129 

Financial Institutions, False Statements Against 145 

Fish, Stuyvesant, and Edward H. Harriman 422 

France, the Watch-Dog of Monetary Europe 93 

Fushimi, Prince and Princess 356 

Futures, Dealings in, Beneficial to Farmers 114 

Gage, Lyman J., on Defective Methods in Banking 5 

German Leadership in European Manufactures 93 

Germany's Commercial Advance 8 

Gladstone, William E., on English Neutrality 361 

on Great American Fortunes 144 

Gold Clearing House, A, Advocated 14, 39-41 



INDEX 453 

PAGE 

Gold Holdings in Europe 393 

Inflation Beneficial 397 

Product of U. S. and Other Countries Compared 395, 396 

Government by Commissions 293 

Grant, U. S., " To Repeal a Bad Law, Enforce It " 117 

Great Fortunes Acquired by Monopoly 27 

Green, Hetty, on Trusts 56 

Greenbacks, Relics of the War Currency System 33 

Harriman, Edward H., a Sketch 417-423 

Hyde, James Hazen, and His Equitable Millions 422 

Immigration, Restriction of 113, 230 

Inheritance Tax Law, An, Wise and Salutary 51 

International Gold Shipments, Uselessness of 14, 39-41 

Investment and Speculation 191-210 

Investments in American Securities, Their Immensity 197 

Ito, Prince, a Great Statesman 249, 385 

a Letter from 386 

Death of 253 

His First Meeting with the Author 250, 385 

Japan, a Roused Lion 95 

Dynasty of, Oldest in the World 356 

Emperor of, Decorates the Author 251 

Japanese-Russo War, Japan's Victory in, Foreshadowed 389 

Jefferson, Thomas, on Constitutions 228 

Kentucky, Women of 98 

Labor and Capital, Their Mutual Interests 104, 399, 400, 406 

Life Insurance Trustees, Their Duty 17 

Lincoln, Abraham, His Boyhood in Kentucky 430 

His Seat in the Temple of Fame 298 

McCormick, Edith Rockefeller, on Motherhood 257 

Marriages, International 60 

Mill, John Stuart, His Definition of Wealth 44 

Mills, D. O., A True Philanthropist 48 

Money Power, The, a Possible Menace 142 

Its Enormous Dimensions 304 

Monroe Doctrine, The 358-360 

Morgan, J. Pierpont, His Princely Art Collections 48 

Municipal Ownership 283-289 



454 INDEX 

PAGE 

Napoleon III, Emperor, Policy of, During Our Civil War 36-2 

National Monetary Commission, The. 135, 153 

Natural Resources of the U. S., Conservation of 130, 295 

Negro Business Men, The Author's Advice to 446 

Newcastle, Duke of, on Woman Suffrage. 261 

New England Individualism 107 

New York City Government, The Wastefulness of 294, 297 

Clearing House, The, Could Regulate Rates of 

Interest 37 

Stock Exchange, The, a Barometer of Financial 

Values, 34; High Character of Its Membership 209 

Overcapitalization 408, 411 

Panic of 1907, Increased the Wealth of Speculative Capital- 
ists 141, 145 

Paper Money Should be Redeemable in Gold 33 

Parker, Prof. Herschel C, a Toast in His Honor 337 

Patterson, James K., and the University of Kentucky 429, 443 

Peary, Robert E., a Luncheon for 336 

Philippines, The, a Bone of Contention 94 

Plutocratic Oligarchy, A, Dangerous to our Institutions 143 

Presidency, The, Corporations Aiming to Control 129, 142 

Railway Bonds and Stock, Excessive Issues of 82 

Construction in U. S„ Early Difficulties of 407-409 

Mileage in U. S. Controlled by Fifty-Seven Systems 119 

Shares, British, threatened with Overdoses of Water 410 

Railways, Crooked Financiering of 366-368 

Fixed Charges of, a Key to Investment Values 197 

Government Ownership of, Opposed 184 

Real Estate Speculation in 1906 32 

Rich Men, Benefactions of 63 

Rockefeller, John D., and the Chicago University 48 

Roosevelt, Theodore 51, 55, 56, 64, 67, 

76, 78, 85, 86, 90, 111, 127, 143, 144, 173, 232-248, 252, 253, 298 

Sage, Russell, Belonged to the Plain People 57 

His Wealth Kept in Circulation 46 

Lessons Furnished by His Career 402, 403 

Shackleton, Sir Ernest H., a Luncheon in His Honor 336 

Shaw, Dr. Anna, on Women as Policemen 259 

Shaw, Leslie M., a Tribute to His Public Services 428 

Socialism 91, 92, 125, 177, 189, 190, 271-290 

South America, a Vast Gold Mine 398 



INDEX 455 

PAGE 

South, The, New Era in 31 

South's Prosperity, The 95 

Speculation, a Business in Itself, a Science 203, 206 

Dangers of Over Bought and Over-sold Markets 206 

Not Gambling 113, 201 

Speculative Methods of Wall Street, their Investigation Welcomed 208 

Multi-Millionaires Can Create Panics 140 

Short Selling, its Mechanism Explained 204 

Speculator, The, Operates upon Judgment, the Gambler upon 

Chance; Performs a Useful Function 207 

Speculators, A Nation of 191 

Information They should Possess 199 

Stanford, Leland, His Educational Philanthropy 48 

Subsidies, Government, Opposed 214 

Sub-Treasury System, The, its Abolition 23, 34, 78 

Taft, William H., a Luncheon in His Honor 330 

his Election Favored by Capital 143 

his High Qualifications for Office 227 

Will Continue the Roosevelt Policies 236 

Tainted Money, Story of the Two Irishmen 59 

Tariff, The, Excessive Protection not Needed 188 

Gradual Lowering of Schedules Advocated 163 

Should Regulate the Trusts, not Destroy Them 188 

Texas, Immense Territory of 433 

Tilden, Samuel J., " A Still Hunt Wins in Politics " 129 

Tobacco and Paper Trust Cases, The 25 

Travelling Salesman, Anecdote of a Beginner 172 

Trusts, The, Political Domination of, Intolerable 131 

Regulation of, our Greatest Political Problem 130 

Sometimes Formed for Speculative Purposes Only 122 

Their Success the Survival of the Fittest 124 

United States Banks, The, Hotbeds of Corruption; Managed by 

Politicians 176, 301, 302 

Bonds, Evidences of Debt 33 

Their High Price 13 

Their Rapid Reduction 11 

Treasury, Gold Holdings of, in 1904 392 

Wall Street, a Barometer of Values 81 

and the Public, Their Interests Identical 1 

The Monetary Clearing House of the Country ; to be in Time 

the Financial Centre of the World 81 



456 INDEX 



PAGE 

War, Cost of 333 

Washington, Booker T., a Tribute to his Work 444 

Wealth, An Aristocracy of 369 

Distribution of 51 

Limitation of 50 

Men of, Their Financial Assistance in the Civil War 47, 64 

Who Achieved Success from Small Beginnings 401 

Wealthy Men of Colonial and Revolutionary Times 47, 64 

Woman Suffrage Associations in U . S 323 

Women of History, Famous 321 

World, The, Growing Better 435 

World's Fair in 1913, Proposed 339-344 






CIVIL WAR REMINISCENCES 

Address delivered at the New York Headquarters of Lloyd Aspin- 
wall Post and its Associate Society — Grand Army of the Republic, 
April 28th, 1910. 

Mr. Chairman, and Comrades: 

AFTER the Civil War became a recognized fact, caused by the 
firing on Fort Sumter, Lloyd Aspinwall, a particular friend 
of mine and a prosperous business man and society leader, 
who inherited his father's time-honored mercantile and shipping busi- 
ness of Howland, Aspinwall & Co., of South Street, was quick to or- 
ganize a cavalry regiment. He picked out the dashing young society 
men in New York for members, on the order of our present Troop A, 
most of whom were good horseback riders, I being one of them. He 
was elected Colonel. We met to drill twice a week on the vacant lot 
directly opposite St. Patrick's Cathedral, the lot extending from Fifth 
to Sixth Avenues. 

As the War progressed and soldiers were needed to protect Wash- 
ington and the archives of the Government, the Aspinwall Regiment 
was among the first to offer its services. 

I had previously been appointed U. S. Government Agent to sell 
Treasury Notes and Bonds to provide the funds necessary to procure 
clothing and food for the men on the battlefield. As, at that time the 
Treasury was empty, my efforts in New York as fiscal agent of the 
Government, and as a member of the Home Guard, were equally as 
important as those of my comrades who went to face the enemy on 
the battlefield. I was drafted, however, on about the first call for 
men, and, as I felt that I could best serve my country at home, I pro- 
cured a substitute to take my place, who was accepted by the Govern- 
ment. I paid $750 for him, and I have always believed that he did 
valiant work on the field, and that but for his loyalty and desperate 
fighting, together with others like himself, the war might still be raging. 

The Lloyd Aspinwall Regiment did great work for the salvation of 
our Nation and the perpetuation of our Government — the best one ever 
devised by human ingenuity — a government of the people, for the 
457 



458 CIVIL WAR REMINISCENCES 

people and by the people, and a Nation that God Almighty unmis- 
takably designed to be an asylum for the down-trodden and oppressed 
of all other autocratic nations. 

To show you, gentlemen, that I did my duty, and that I made no 
mistake in not going with the Lloyd Aspinwall Regiment to the front, 
the great War Secretary of the U. S. Treasury, Salmon P. Chase, was 
outspoken in saying that if it had not been for the services of Jay 
Cooke and Henry Clews he would not have been able to raise enough 
money to carry on the war. 

The achievements of the Lloyd Aspinwall Regiment were so patri- 
otic and brilliant on the battlefield and elsewhere, and did so much 
toward keeping the States of the Union united under the Stars and 
Stripes, resulting in (what now is) the greatest and most prosperous 
nation in the world, and its people the most contented and happy, that 
the memory of Lloyd Aspinwall and the members of his Regiment 
who went to the front should be made immortal. 

Colonel Aspinwall was promoted to be General for his bravery and 
efficiency in service. He was a valiant soldier and a noble man. All 
honor to General Lloyd Aspinwall, who, like General Wadsworth, left 
his luxurious home with his life in his hands so that our grand Repub- 
lic should be preserved. No two men who went to the War made 
greater personal sacrifices than they — General Wadsworth was the first 
Union General that was killed on the battlefield. His grandson is now 
Speaker of the Assembly at Albany, and is a brilliant young statesman. 

A few months ago I was honored by being made an associate mem- 
ber of the Grand Army of the Republic. The members of this or- 
ganization do not receive the praise and glory to which their service to 
their country entitle them. The ranks are growing thinner every year, 
and too soon the few remaining will live only in our memory. 

In days gone by the wearers of the "Iron Cross" were held in rev- 
erence, and people in all grades of life uncovered as they passed by 
them. Our people are lacking in reverence, and are too apt to for- 
get that the wearer of the Grand Army button, now grizzled and de- 
crepit, was, in his youth, a soldier and a hero. 

While I earnestly hope and believe that war will soon be impossible, 
owing to the efforts and good work of the International Peace Com- 
mission, I appeal to my countrymen to do justice to the old soldier 
in the few remaining years of his life. 



DE£ 



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One copy del. to Cat. Div. 



